Park Corporation is planning to issue bonds with a face value of $3,200,000 and a coupon rate of 10 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective- interest amortization method and also uses a premium account.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Park Corporation
is planning to
issue bonds with a face value of
$3,200,000
and a coupon rate of
10 percent. The bonds mature in
10 years and pay interest
semiannually every June 30 and
December 31. All of the bonds
were sold on January 1 of this
year. Park uses the effective-
interest amortization method and
also uses a premium account.
Assume an annual market rate of
interest of 8.5 percent. (FV of $1,
PV of $1, FVA of $1, and PVA of $1)
Note: Use appropriate factor(s)
from the tables provided.
Required:
1. and 2. Prepare the journal entry
to record the issuance of the
bonds and the interest payment
on June 30 of this year
3. What bonds payable amount
will Park report on its June 30
balance sheet?
(please provide the solution and
formula used, round the number
to the whole dollar)
Transcribed Image Text:Park Corporation is planning to issue bonds with a face value of $3,200,000 and a coupon rate of 10 percent. The bonds mature in 10 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Park uses the effective- interest amortization method and also uses a premium account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: 1. and 2. Prepare the journal entry to record the issuance of the bonds and the interest payment on June 30 of this year 3. What bonds payable amount will Park report on its June 30 balance sheet? (please provide the solution and formula used, round the number to the whole dollar)
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