Teal Mountain Inc. is building a new hockey arena at a cost of $2,900,000. It received a down payment of $580,000 from local businesses to support the project, and now needs to borrow $2,320,000 to complete the project. Ittherefore decides to issue $2,320,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10% to the investor and have an effective interest rate tothe issuer of 10.4053%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. TealMountain Inc. paid and capitalized $58,000 in bond issuance costs related to the bond issue. Teal Mountain prepares financial statements in accordance with IFRS.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.(a)Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the value of the bonds and prepare the journal entry to record the issuance of the bonds on January 1, 2020. (Hint: Refer to Chapter 3 for tipson calculating. For the journal entry, use the amount arrived at using the time value of money tables.) (For calculation purposes, use 5 decimal places as displayed in the factor table provided and final answers to O decimal places, e.g.5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)DateAccount Titles and ExplanationDebitCreditJan. 1, 2020

Present value function: Pmt $2,320,000*10.5% $243,600 Nper Number of years per bond…

Teal Mountain Inc. is building a new hockey arena at a cost of $2,900,000. It received a down payment of $580,000 from local businesses to support the project, and now needs to borrow $2,320,000 to complete the project. It therefore decides to issue $2,320,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10% to the investor and have an effective interest rate to the issuer of 10.4053%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Teal Mountain Inc. paid and capitalized $58,000 in bond issuance costs related to the bond issue. Teal Mountain prepares financial statements in accordance with IFRS.

Teal Mountain Inc. is building a new hockey arena at a cost of $2,900,000. It received a down payment of $580,000 from local businesses to support the project, and now needs to borrow $2,320,000 to complete the project. It therefore decides to issue $2,320,000 of 10-year, 10.5% bonds. These bonds were issued on January 1, 2020, and pay interest annually on each January 1. The bonds yield 10% to the investor and have an effective interest rate to the issuer of 10.4053%. (There is an increased effective interest rate due to the capitalization of the bond issue costs.) Any additional funds that are needed to complete the project will be obtained from local businesses. Teal Mountain Inc. paid and capitalized $58,000 in bond issuance costs related to the bond issue. Teal Mountain prepares financial statements in accordance with IFRS.

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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