Question

I need help with all 7 requirements. Thank You!

When Patey Pontoons issued 4% bonds on January 1, 2021, with a face amount of $660,000, the market yield for bonds of similar risk and maturity was 5%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price of the bonds at January 1, 2021. 2. Prepare the journal entry to record their issuance by Patey on January 1, 2021. 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, 2021. 5. What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2021? 6. What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2021? (Ignore income taxes.) 7. Prepare the appropriate journal entries at maturity on December 31, 2024. Complete this question by entering your answers in the tabs below. Req 1 Reg 2 Req3 Req 4 Req 5 and 6 Req 7 Determine the price of the bonds at January 1, 2021. (Round final answers to the nearest whole dollar.) Table values are based on: n = 8 2.5% Cash Flow Amount Interest $ 13,200 Principal | $ 660,000 Present Value

Answer 1

	principal				660,000
	interest paid on bonds 660,000*2%=				13200
	For Principal use PV of $1 table at 2.5% for 8 years
	for interest use PV of ordinary annuity table at 2.5% for 8 years
1)	Calculation of bonds issue price
	table values are based on
	n=	8
	i=	2.50%
	Cash flow		Amount	PV
	principal		660,000	541695		(660,000*.82075)
	interest expense		13200	94646		(13200*7.17014)
	price of bonds			636341
	(please use factor table as given in your question )
2)	Date	Accoounting titles & Explanations				Debit	Credit
	1/1/2021	Cash				636341
		Discount on bonds payable				23,659
		Bonds payable					660,000
3)	interest	cash	bond	discount	carring
	period	interest	interest	amortizatioon	value
	end		expense
			2.50%
	1/1/2021				636341
	06/30/21	13200	15909	2709	639049
	12/31/21	13200	15976	2776	641826
	06/30/22	13200	16046	2846	644671
	12/31/22	13200	16117	2917	647588
	06/30/23	13200	16190	2990	650578
	12/31/23	13200	16264	3064	653642
	06/30/24	13200	16341	3141	656783
	12/31/24	13200	16418	3217	660000
	total	105600	129260	23659
4)	Date	Accoounting titles & Explanations				Debit	Credit
	30/6/2021	interest expense				15909
		Discount on bonds					2709
		cash					13200
5)	December 31,2021 book value			641826
6)	interest expense for 2021			31885
7)
	Date	Accoounting titles & Explanations				Debit	Credit
	12/31/24	interest expense				16418
		Discount on bonds					3217
		cash					13200
		bonds payable				660,000
		cash					660,000