On May 1, 2020, a $300,000, ten-year, 14% bond was sold to yield 12% plus accrued interest. The bond was dated January 1, 2020, and interest is paid each January 1 and July 1. Present value data follow: PV of $1 PV of an Annuity of $1 10 periods 20 periods 10 periods 20 periods 6% 0.558395 0.311805 7.360087 11.469921 7% 0.508349 0.258419 7.023582 10.594014 12% 0.321973 0.103667 5.650223 7.469444 14% 0.321973 0.072762 5.216116 6.623131 Required: a. Compute the amount of cash received from the sale of the bond. b. Prepare the journal entry to record the sale. c. Why is the amount of cash received from issuing the bond not equal to the face amount of the bond?

On May 1, 2020, a $300,000, ten-year, 14% bond was sold to yield 12% plus accrued interest. The bond was dated January 1, 2020, and interest is paid each January 1 and July 1. Present value data follow: PV of $1 PV of an Annuity of $1 10 periods 20 periods 10 periods 20 periods 6% 0.558395 0.311805 7.360087 11.469921 7% 0.508349 0.258419 7.023582 10.594014 12% 0.321973 0.103667 5.650223 7.469444 14% 0.321973 0.072762 5.216116 6.623131 Required: a. Compute the amount of cash received from the sale of the bond. b. Prepare the journal entry to record the sale. c. Why is the amount of cash received from issuing the bond not equal to the face amount of the bond?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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