Vanguard Corporation issued $6,000,000 of 12% bonds on January 1, 2023, due on January 1, 2037. The interest is to be paid twice a year on January 1 and July 1. The bonds were sold to yield 7% effective annual interest. Grove Corporation closes its books annually on December 31. Instructions Present value of 1 for 28 periods at 3.5% Present value of 1 for 28 periods at 6% Present value of an ordinary annuity for 28 periods at 3.5% Present value of an ordinary annuity for 28 periods at 6% 0.38165 0.19563 17.66702 13.40616 (a) Calculate the issuing price of the bonds (show your work). (b) Prepare the journal entries for the second year (January 1, 2024 - January 1, 2025) using the effective-interest method. (c) Compute the interest expense to be reported in the income statement for the year ended, December 31, 2024

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Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.