8.
On January 2, 2019, H Inc issued 1,000,000 of its 8%, 5-year bonds payable. The
bonds pay interest semi-annually on June 30th and December 31st. The bonds were issued
to yield 10% (the market rate for such bonds.) (20 points)
You are to use the following present value factors:
4%, 10 years Present Value of $1 Present Value of Ordinary Annuity
8%, 5 years 0.6756 8.111
5%, 10 years 0.6806 3.993
10%, 5 years 0.6139 7.722
0.6209 3.791
INSTRUCTIONS:
a. Determine the issuance price of the bonds.
b. Prepare the journal entry for the issuance of the bonds on 1/2/19.
c. Using the effective interest method to amortize any discount or premium on the bonds,
prepare the 12/31/19 journal entries to record the 2019 interest expense.
d. Prepare the journal entry for the retirement of the bond at maturity on 1/2/24.
9 On Janus 400