All parts please The Bradford Company issued 12% bonds, dated January 1, with a

Question

All parts please

The Bradford Company issued 12% bonds, dated January 1, with a face amount of $87 million on January 1, 2018. The bonds mature on December 31, 2027 (10 years). For bonds of similar risk and maturity, the market yield is 14%. Interest is paid semiannually on June 30 and December 31. (FV of $1, PV of $1, EVA 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, 2018. 2. to 4. Prepare the journal entry to record their issuance by The Bradford Company on January 1, 2018, interest on June 30, 2018 and interest on December 31, 2018 (at the effective rate). Complete this question by entering your answers in the tabs below. Req 1 Req 2 to 4 Determine the price of the bonds at January 1, 2018. (Enter your answers whole dollars.) Table values are based on: 20 7 0% Cash Flow Interest Principal Amount Present Value Price of bonds

Explanation / Answer

Req 1. Price of Bonds: n = 20 I = 7% Cashflows Amount Present value Interest 5220000 55300680 Principal 87,000,000 22482540 Price of Bonds: 77783220 Req 2. Amort chart: Date Cash Interest Discount Unamortized Carrying Interest Expenses Amortized Discount Value of bonds 01.01.18 9216780 77783220 30.06.18 5220000 5444825 224825 8991955 78008045 31.12.18 5220000 5460563 240563 8751392 78248608 Journal entries: Date Accounts title and explanations Debit $ Credit $ 01.01.18 Cash account Dr. 77783220 Discount on bonds payable Dr. 9216780      Bonds payable 87000000 30.06.18 Interest expense Dr. 5444825       Cash account 5220000        Discount on bonds payable 224825 31.12.18 Interest expense Dr. 5460563       Cash account 5220000        Discount on bonds payable 240563

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