# Solved >   144. On January 1, a company issues bonds:1386778 …

144. On January 1, a company issues bonds with a par value of \$300,000. The bonds mature in 5 years and pay 8% annual interest, payable each June 30 and December 31. On the issue date, the market rate of interest for the bonds is 10%. Compute the price of the bonds on their issue date. The following information is taken from present value tables:

 Present value of an annuity for 10 periods at 4% 8.1109 Present value of an annuity for 10 periods at 5% 7.7217 Present value of 1 for 10 periods at 4% 0.6756 Present value of 1 for 10 periods at 5% 0.6139

145. On August 1, 2010, a company issues bonds with a par value of \$600,000. The bonds mature in 10 years and pay 6% annual interest, payable each February 1 and August 1. The bonds sold at \$632,000. The company uses the straight-line method of amortizing bond premiums. The company’s year-end is December 31. Prepare the general journal entry to record the interest accrued at December 31, 2010.

146. On August 1, 2010, a company issues bonds with a par value of \$600,000. The bonds mature in 10 years and pay 6% annual interest, payable each February 1 and August 1. The bonds sold at \$592,000. The company uses the straight-line method of amortizing bond discounts. The company’s year-end is December 31. Prepare the general journal entry to record the interest accrued at December 31, 2010.

147. Walker Corporation issued 14%, 5-year bonds with a par value of \$5,000,000 on January 1, 2010. Interest is to be paid semiannually on each June 30 and December 31. The bonds were issued at \$5,368,035 cash when the market rate for this bond is 12%

(a) Prepare the general journal entry to record the issuance of the bonds on January 1, 2010.

(b) Show how the bonds would be reported on Walker’s balance sheet at January 1, 2010.

(c) Assume that Walker uses the effective interest method for amortizing any discount or premium on bonds. Prepare the general journal entry to record the first semiannual interest payment on June 30, 2010.

(d) Assume instead that Walker uses the straight-line method for amortizing any discount or premium on bonds. Prepare the general journal entry to record the first semiannual interest payment on June 30, 2010.

148. On January 1, 2010, a company issued 10%, 10-year bonds payable with a par value of \$720,000. The bonds pay interest each July 1 and January 1. The bonds were sold for \$817,860 cash, which provides the holders an annual yield of 8%. Prepare the issuer’s general journal entry to record the first semiannual interest payment assuming the effective interest method is used.

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