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Reporting Bonds Issued at Par LO 10-2

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P10-2 Reporting Bonds Issued at Par LO 10-2

On January 1, 2014, Nowell Company issued $500,000 in bonds that mature in five years. The bonds have a stated interest rate of 8 percent and pay interest on June 30 and December 31 each year. When the bonds were sold, the market rate of interest was 8 percent. (If necessary, use the appropriate factor(s) from the tables provided.) (FV of $1 PV of $1 FVA of $1 PVA of $1 )

1 What was the issue price on January 1, 2014?

Issue price

2 What amount of interest expense should be recorded on (a) June 30, 2014? and (b) December 31, 2014?

June 30, 2014 December 31, 2014
Interest expense

3 What amount of cash interest should be paid on (a) June 30, 2014? and (b) December 31, 2014?

June 30, 2014 December 31, 2014
Cash paid

4 What is the book value of the bonds on (a) December 31, 2014? and (b) December 31, 2015?

December 31, 2014 December 31, 2015
Bonds payable

(See attached file)

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This solution provides answers to various questions regarding bonds in Excel

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