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Us Help System Announcements CALCULATOR PRINTER VERSION BACK NEXT Problem 14-02 (Part Level Submission) Sarasota Co. is building a new hockey arena at a cost of $2,550,000. It received a downpayment of $450,000 from local businesses to support the project, and now needs to borrow $2,100,000 to complete the project. It therefore decides to issue $2,100,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10% (a) Prepare the journal entry to record the issuance of the bonds on January 1, 2019. (Round present value factor calculations to decimal places, e.g. 1.25124 and the final answer too decimal places eg. 58,971. If no entry is required, select "No Entry for the account titles and enter for the amounts. Credit account tities are automatically indented when amount is entered. De not indent manually.) Date Account Tides and Explanation Debit Credit January 1, 2019 SHOW LIST OF ACCOUNTS LINK TO TEET LINK TO TEXT Attempts of 5 used SAVE POR LATER SUBMIT ANSWER (b) The parts of this question must be completed in order. This part will be available when you complete the part above (C) The parts of this question must be completed in order. This part will be available when you complete the part above MacBook Air

Answer 1

Requirement a:

Date	Account title and explanation	Debit	Credit
January 1, 2019	Cash	$2,229,030
	Bonds payable		$2,100,000
	Premium on bonds payable		$129,030
	[To record issuance of bonds]

Calculations:

Cash interest = $2,100,000 x 11% = $231,000

Present value of interest payment	$1,419,396
[$231,000 x 6.14457 present value annuity factor at 10% for 10 years]
Present value of face value	$809,634
[$2,100,000 x 0.38554 present value factor at 10% for 10 years]
Issue price of the bonds	$2,229,030