Present Value of $1 PV of Annuity of $1 Issuance of a Bond at Face Value On January 1, 2017, Whitefeather Industries issued 1,400, $1,000 face value bonds. The bonds have a(n) 10-year life and pay interest at the rate of 10%. Interest is paid semiannually on July 1 and January 1. The market rate of interest on January 1 was 10%. Use the present value tables that may be found by clicking on the present value table links above. Round your answer to the nearest dollar. Required: 1. Calculate the issue price of the bonds and record the issuance of the bonds on January 1, 2017. Round your final answer to the nearest dollar. Identify and analyze the effect of the issuance of the bonds on January 1, 2017. Activity financing, investing, investing & financing or operating Accounts cash increase, bonds payable increase cash increase, bonds payable decrease cash decrease, bonds payable increase cash decrease, bonds payable decrease Statement(s) balance sheet only balance sheet and income statement income statement only How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Stockholders' Net Assets =? Liabilities + Equity Revenues – Expenses = Income ? ? ? ? ? ? ? ? ? 3. Identify and analyze the effect of the payment of interest on July 1, 2017. Activity financing, investing, investing & financing or operating Accounts cash increase, bonds payable increase cash increase, bonds payable decrease cash decrease, bonds payable increase cash decrease, bonds payable decrease Statement(s) balance sheet only balance sheet and income statement income statement only How does this entry affect the accounting equation? If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign. Balance Sheet Income Statement Stockholders' Net Assets = Liabilities + Equity Revenues – Expenses = Income ? ? ? ? ? ? ? ? ?
Issuance of a
On January 1, 2017, Whitefeather Industries issued 1,400, $1,000 face value bonds. The bonds have a(n) 10-year life and pay interest at the rate of 10%. Interest is paid semiannually on July 1 and January 1. The market rate of interest on January 1 was 10%. Use the present value tables that may be found by clicking on the present value table links above. Round your answer to the nearest dollar.
Required:
1. Calculate the issue price of the bonds and record the issuance of the bonds on January 1, 2017. Round your final answer to the nearest dollar.
Identify and analyze the effect of the issuance of the bonds on January 1, 2017.
| Activity | financing, investing, investing & financing or operating |
| Accounts |
cash increase, bonds payable increase cash increase, bonds payable decrease cash decrease, bonds payable increase cash decrease, bonds payable decrease |
| Statement(s) |
balance sheet only balance sheet and income statement income statement only |
How does this entry affect the
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | =? | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| ? | ? | ? | ? | ? | ? | ? | ? | ? |
3. Identify and analyze the effect of the payment of interest on July 1, 2017.
| Activity | financing, investing, investing & financing or operating |
| Accounts |
cash increase, bonds payable increase cash increase, bonds payable decrease cash decrease, bonds payable increase cash decrease, bonds payable decrease |
| Statement(s) |
balance sheet only balance sheet and income statement income statement only |
How does this entry affect the accounting equation?
If a financial statement item is not affected, select "No Entry" and leave the amount box blank. If the effect on a financial statement item is negative, i.e, a decrease, be sure to enter the answer with a minus sign.
| Balance Sheet | Income Statement | |||||||||||||
| Stockholders' | Net | |||||||||||||
| Assets | = | Liabilities | + | Equity | Revenues | – | Expenses | = | Income | |||||
| ? | ? | ? | ? | ? | ? | ? | ? | ? |
4. Calculate the amount of interest accrued on December 31, 2017. If required, round your answer to the nearest dollar.
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