When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $560,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Req 1 Req 5 and 6 What is the amount(s) related to the bonds that Patey will report in its balance sheet at December 31, 2024 and income statement for the year ended December 31, 2024? (Ignore income taxes.) Note: Round intermediate calculations and final answers to the nearest whole dollar. Req 2 Req 3 5. December 31, 2024 book value 6. Interest expense for 2024 Req 4 Req 7

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $560,000, the market yield for bonds of similar risk
and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31.
Required:
1. Determine the price of the bonds at January 1, 2024.
2. Prepare the journal entry to record their issuance by Patey on January 1, 2024.
3. Prepare an amortization schedule that determines interest at the effective rate each period.
4. Prepare the journal entry to record interest on June 30, 2024.
5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024?
6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024?
(Ignore income taxes.)
7. Prepare the appropriate journal entries at maturity on December 31, 2027.
Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
Complete this question by entering your answers in the tabs below.
Req 5 and 6
What is the amount(s) related to the bonds that Patey will report in its balance sheet at December 31, 2024 and income
statement for the year ended December 31, 2024? (Ignore income taxes.)
Note: Round intermediate calculations and final answers to the nearest whole dollar.
Req 1
Req 2
5. December 31, 2024 book value
6. Interest expense for 2024
Req 3
Req 4
Req 7
Transcribed Image Text:When Patey Pontoons issued 10% bonds on January 1, 2024, with a face amount of $560,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2027 (4 years). Interest is paid semiannually on June 30 and December 31. Required: 1. Determine the price of the bonds at January 1, 2024. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2024. 3. Prepare an amortization schedule that determines interest at the effective rate each period. 4. Prepare the journal entry to record interest on June 30, 2024. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2024? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2024? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2027. Note: Use tables, Excel, or a financial calculator. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Complete this question by entering your answers in the tabs below. Req 5 and 6 What is the amount(s) related to the bonds that Patey will report in its balance sheet at December 31, 2024 and income statement for the year ended December 31, 2024? (Ignore income taxes.) Note: Round intermediate calculations and final answers to the nearest whole dollar. Req 1 Req 2 5. December 31, 2024 book value 6. Interest expense for 2024 Req 3 Req 4 Req 7
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