Reference no: EM132482396
When Patey Pontoons issued 8% bonds on January 1, 2021, with a face amount of $860,000, the market yield for bonds of similar risk and maturity was 11%. The bonds mature December 31, 2024 (4 years). Interest is paid semiannually on June 30 and December 31. (FV of $1,PV of $1,FVA of $1,PVA of $1,FVAD of $1andPVAD of $1)(Use appropriate factor(s) from the tables provided.)
Required:
Question 1: Determine the price of the bonds at January 1, 2021.
Question 2: Prepare the journal entry to record their issuance by Patey on January 1, 2021.
Question 3: Prepare the journal entry to record interest on June 30, 2021.
Question 4: What is the amount related to the bonds that Patey will report in its balance sheet at December 31, 2021?
Question 5: What is the amount related to the bonds that Patey will report in its income statement for the year ended December 31, 2021? (Ignore income taxes.)
Question 6: Prepare the appropriate journal entries at maturity on December 31, 2024.
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