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Saverin, Inc. produces and sells outdoor equipment. On July 1,2016, Saverin, Inc. issued $62,500,000 of 10-year, 9% bonds at amarket (effective) interest rate of 8%, receiving cash of$66,747,178. Interest on the bonds is payable semiannually onDecember 31 and June 30. The fiscal year of the company is thecalendar year.

Required:

1. Journalize the entry to recordthe amount of cash proceeds from the issuance of thebonds.*
2. Journalize the entries torecord the following:*
a. The first semiannual interestpayment on December 31, 2016, and the amortization of the bondpremium, using the interest method. (Round to the nearestdollar.)
b. The interest payment on June30, 2017, and the amortization of the bond premium, using theinterest method. (Round to the nearest dollar.)
3. Determine the total interestexpense for 2016.
*Be sure to include the year inthe date for the entries. Refer to the Chart of Accounts for exactwording of account titles.

i am having problem with

. The interest payment on June30, 2017, and the amortization of the bond premium, using theinterest method. (Round to the nearest dollar.)
3. Determine the total interestexpense for 2016.
.

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Jean Keeling
Jean KeelingLv2
28 Sep 2019

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Saverin Inc. produces and sells outdoor equipment. On July 1, 2016, Saverin Inc. issued $21,000,000 of 10-year, 13% bonds at a market (effective) interest rate of 12%, receiving cash of $22,204,241. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 2016.*
2. Journalize the entries to record the following:*
a. The first semiannual interest payment on December 31, 2016, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2017, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2016.
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
5. Compute the price of $22,204,241 received for the bonds by using the tables shown in Present Value Tables. (Round to the nearest dollar.)

On July 1, 2016, Merideth Industries Inc. issued $28,500,000 of10-year, 8% bonds at a market (effective) interest rate of 9%,receiving cash of $26,646,292. Interest on the bonds is payablesemiannually on December 31 and June 30. The fiscal year of thecompany is the calendar year. Required: 1. Journalize the entry torecord the amount of cash proceeds from the issuance of the bondson July 1, 2016.* 2. Journalize the entries to record thefollowing:* a. The first semiannual interest payment on December31, 2016, and the amortization of the bond discount, using thestraight-line method. (Round to the nearest dollar.) b. Theinterest payment on June 30, 2017, and the amortization of the bonddiscount, using the straight-line method. (Round to the nearestdollar.) 3. Determine the total interest expense for 2016. 4. Willthe bond proceeds always be less than the face amount of the bondswhen the contract rate is less than the market rate of interest? 5.Compute the price of $26,646,292 received for the bonds by usingthe tables shown in Present Value Tables. (Round to the nearestdollar.)f *Be sure to include the year in the date for the entries.Refer to the Chart of Accounts for exact wording of accounttitles.

Saverin Inc. produces and sells outdoor equipment. On July 1,2016, Saverin Inc. issued $14,000,000 of 10-year, 11% bonds at amarket (effective) interest rate of 9%, receiving cash of$15,821,074. Interest on the bonds is payable semiannually onDecember 31 and June 30. The fiscal year of the company is thecalendar year.

Required:

1. Journalize the entry to record the amount of cash proceeds fromthe issuance of the bonds on July 1, 2016.*
2. Journalize the entries to record the following:*
a. The first semiannual interest payment on December 31, 2016, andthe amortization of the bond premium, using the straight-linemethod. (Round to the nearest dollar.)
b. The interest payment on June 30, 2017, and the amortization ofthe bond premium, using the straight-line method. (Round to thenearest dollar.)
3. Determine the total interest expense for 2016.
4. Will the bond proceeds always be greater than the face amountof the bonds when the contract rate is greater than the market rateof interest?
5. Compute the price of $15,821,074 received for the bonds byusing the tables shown in Present Value Tables. (Round to thenearest dollar.)

*Be sure to include the year in the date for the entries. Referto the Chart of Accounts for exact wording of account titles.

1. and 2. Journalize the entries to record the transactions. Besure to include the year in the date for the entries. Refer to theChart of Accounts for exact wording of account titles.

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The grader is designed to give you the best score possible, evenwhen you skip lines or enter them out of order. It does this bytaking every line you have entered and comparing it to every linein the answer. When it finds the line that gives you the bestscore, it considers that a match.

PAGE 10

JOURNAL

Score: 100/112

DATE DESCRIPTION POST. REF. DEBIT CREDIT

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Solution

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

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5

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9

Points:

18.75 / 21

Feedback

Check My Work

Bonds Payable is always recorded at face value. Any differencein issue price is reflected in a premium or discount account.

The straight-line method of amortization provides equal amountsof amortization over the life of the bond.

Explanation

none

X

Final Questions

Shaded cells have feedback.

3. Determine the total interest expense for 2016.

Points:

0 / 1

4. Will the bond proceeds always be greater than the face amountof the bonds when the contract rate is greater than the market rateof interest?

Yes

CHART OF ACCOUNTS
Saverin Inc.
General Ledger
ASSETS
110 Cash
111 Petty Cash
121 Accounts Receivable
122 Allowance for Doubtful Accounts
126 Interest Receivable
127 Notes Receivable
131 Merchandise Inventory
141 Office Supplies
142 Store Supplies
151 Prepaid Insurance
191 Land
192 Store Equipment
193 Accumulated Depreciation-Store Equipment
194 Office Equipment
195 Accumulated Depreciation-Office Equipment
LIABILITIES
210 Accounts Payable
221 Salaries Payable
231 Sales Tax Payable
232 Interest Payable
241 Notes Payable
251 Bonds Payable
252 Discount on Bonds Payable
253 Premium on Bonds Payable
EQUITY
311 Common Stock
312 Paid-In Capital in Excess of Par-Common Stock
315 Treasury Stock
321 Preferred Stock
322 Paid-In Capital in Excess of Par-Preferred Stock
331 Paid-In Capital from Sale of Treasury Stock
340 Retained Earnings
351 Cash Dividends
352 Stock Dividends
390 Income Summary
REVENUE
410 Sales
610 Interest Revenue
611 Gain on Redemption of Bonds
EXPENSES
510 Cost of Merchandise Sold
515 Credit Card Expense
516 Cash Short and Over
521 Sales Salaries Expense
522 Office Salaries Expense
531 Advertising Expense
532 Delivery Expense
533 Repairs Expense
534 Selling Expenses
535 Rent Expense
536 Insurance Expense
537 Office Supplies Expense
538 Store Supplies Expense
541 Bad Debt Expense
561 Depreciation Expense-Store Equipment
562 Depreciation Expense-Office Equipment
590 Miscellaneous Expense
710 Interest Expense
711 Loss on Redemption of Bonds

Journal

Shaded cells have feedback.

1. and 2. Journalize the entries to record the transactions. Besure to include the year in the date for the entries. Refer to theChart of Accounts for exact wording of account titles.

DATE DESCRIPTION POST. REF. DEBIT CREDIT

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Solution

DATE DESCRIPTION POST. REF. DEBIT CREDIT

1

2

3

4

5

6

7

8

9

Points:

18.75 / 21

Feedback

Check My Work

Bonds Payable is always recorded at face value. Any differencein issue price is reflected in a premium or discount account.

The straight-line method of amortization provides equal amountsof amortization over the life of the bond.

Explanation

none

X

Final Questions

Shaded cells have feedback.

3. Determine the total interest expense for 2016.

Points:

0 / 1

4. Will the bond proceeds always be greater than the face amountof the bonds when the contract rate is greater than the market rateof interest?

Yes

No

Points:

1 / 1

5. Compute the price of $15,821,074 received for the bonds byusing the tables shown in Present Value Tables. (Round to thenearest dollar.)

Present value of the face amount
Present value of the semiannual interest payments
Price received for the bonds

Points:

0 / 3

Feedback

Check My Work

Bonds Payable is always recorded at face value. Any differencein issue price is reflected in a premium or discount account.

The straight-line method of amortization provides equal amountsof amortization over the life of the bond.

Explanation

none

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Two present value tables are provided: Present Value of $1 atCompound Interest Due in n Periods and Present Value of OrdinaryAnnuity of $1 per Period. Use them as directed in the problemrequirements.

Present Value of $1 at Compound Interest Due in n Periods

Periods

4.0%

4.5%

5%

5.5%

6%

6.5%

7%
1 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458
2 0.92456 0.91573 0.90703 0.89845 0.89000 0.88166 0.87344
3 0.88900 0.87630 0.86384 0.85161 0.83962 0.82785 0.81630
4 0.85480 0.83856 0.82270 0.80722 0.79209 0.77732 0.76290
5 0.82193 0.80245 0.78353 0.76513 0.74726 0.72988 0.71299
6 0.79031 0.76790 0.74622 0.72525 0.70496 0.68533 0.66634
7 0.75992 0.73483 0.71068 0.68744 0.66506 0.64351 0.62275
8 0.73069 0.70319 0.67684 0.65160 0.62741 0.60423 0.58201
9 0.70259 0.67290 0.64461 0.61763 0.59190 0.56735 0.54393
10 0.67556 0.64393 0.61391 0.58543 0.55839 0.53273 0.50835
11 0.64958 0.61620 0.58468 0.55491 0.52679 0.50021 0.47509
12 0.62460 0.58966 0.55684 0.52598 0.49697 0.46968 0.44401
13 0.60057 0.56427 0.53032 0.49856 0.46884 0.44102 0.41496
14 0.57748 0.53997 0.50507 0.47257 0.44230 0.41410 0.38782
15 0.55526 0.51672 0.48102 0.44793 0.41727 0.38883 0.36245
16 0.53391 0.49447 0.45811 0.42458 0.39365 0.36510 0.33873
17 0.51337 0.47318 0.43630 0.40245 0.37136 0.34281 0.31657
18 0.49363 0.45280 0.41552 0.38147 0.35034 0.32189 0.29586
19 0.47464 0.43330 0.39573 0.36158 0.33051 0.30224 0.27651
20 0.45639 0.41464 0.37689 0.34273 0.31180 0.28380 0.25842
21 0.43883 0.39679 0.35894 0.32486 0.29416 0.26648 0.24151
22 0.42196 0.37970 0.34185 0.30793 0.27751 0.25021 0.22571
23 0.40573 0.36335 0.32557 0.29187 0.26180 0.23494 0.21095
24 0.39012 0.34770 0.31007 0.27666 0.24698 0.22060 0.19715
25 0.37512 0.33273 0.29530 0.26223 0.23300 0.20714 0.18425
26 0.36069 0.31840 0.28124 0.24856 0.21981 0.19450 0.17220
27 0.34682 0.30469 0.26785 0.23560 0.20737 0.18263 0.16093
28 0.33348 0.29157 0.25509 0.22332 0.19563 0.17148 0.15040
29 0.32065 0.27902 0.24295 0.21168 0.18456 0.16101 0.14056
30 0.30832 0.26700 0.23138 0.20064 0.17411 0.15119 0.13137
31 0.29646 0.25550 0.22036 0.19018 0.16425 0.14196 0.12277
32 0.28506 0.24450 0.20987 0.18027 0.15496 0.13329 0.11474
33 0.27409 0.23397 0.19987 0.17087 0.14619 0.12516 0.10723
34 0.26355 0.22390 0.19035 0.16196 0.13791 0.11752 0.10022
35 0.25342 0.21425 0.18129 0.15352 0.13011 0.11035 0.09366
40 0.20829 0.17193 0.14205 0.11746 0.09722 0.08054 0.06678
45 0.17120 0.13796 0.11130 0.08988 0.07265 0.05879 0.04761
50 0.14071 0.11071 0.08720 0.06877 0.05429 0.04291 0.03395

Present Value of Ordinary Annuity of $1 per Period

Periods

4.0%

4.5%

5%

5.5%

6%

6.5%

7%
1 0.96154 0.95694 0.95238 0.94787 0.94340 0.93897 0.93458
2 1.88609 1.87267 1.85941 1.84632 1.83339 1.82063 1.80802
3 2.77509 2.74896 2.72325 2.69793 2.67301 2.64848 2.62432
4 3.62990 3.58753 3.54595 3.50515 3.46511 3.42580 3.38721
5 4.45182 4.38998 4.32948 4.27028 4.21236 4.15568 4.10020
6 5.24214 5.15787 5.07569 4.99553 4.91732 4.84101 4.76654
7 6.00205 5.89270 5.78637 5.68297 5.58238 5.48452 5.38929
8 6.73274 6.59589 6.46321 6.33457 6.20979 6.08875 5.97130
9 7.43533 7.26879 7.10782 6.95220 6.80169 6.65610 6.51523
10 8.11090 7.91272 7.72173 7.53763 7.36009 7.18883 7.02358
11 8.76048 8.52892 8.30641 8.09254 7.88687 7.68904 7.49867
12 9.38507 9.11858 8.86325 8.61852 8.38384 8.15873 7.94269
13 9.98565 9.68285 9.39357 9.11708 8.85268 8.59974 8.35765
14 10.56312 10.22283 9.89864 9.58965 9.29498 9.01384 8.74547
15 11.11839 10.73955 10.37966 10.03758 9.71225 9.40267 9.10791
16 11.65230 11.23402 10.83777 10.46216 10.10590 9.76776 9.44665
17 12.16567 11.70719 11.27407 10.86461 10.47726 10.11058 9.76322
18 12.65930 12.15999 11.68959 11.24607 10.82760 10.43247 10.05909
19 13.13394 12.59329 12.08532 11.60765 11.15812 10.73471 10.33560
20 13.59033 13.00794 12.46221 11.95038 11.46992 11.01851 10.59401
21 14.02916 13.40472 12.82115 12.27524 11.76408 11.28498 10.83553
22 14.45112 13.78442 13.16300 12.58317 12.04158 11.53520 11.06124
23 14.85684 14.14777 13.48857 12.87504 12.30338 11.77014 11.27219
24 15.24696 14.49548 13.79864 13.15170 12.55036 11.99074 11.46933
25 15.62208 14.82821 14.09394 13.41393 12.78336 12.19788 11.65358
26 15.98277 15.14661 14.37519 13.66250 13.00317 12.39237 11.82578
27 16.32959 15.45130 14.64303 13.89810 13.21053 12.57500 11.98671
28 16.66306 15.74287 14.89813 14.12142 13.40616 12.74648 12.13711
29 16.98371 16.02189 15.14107 14.33310 13.59072 12.90749 12.27767
30 17.29203 16.28889 15.37245 14.53375 13.76483 13.05868 12.40904
31 17.58849 16.54439 15.59281 14.72393 13.92909 13.20063 12.53181
32 17.87355 16.78889 15.80268 14.90420 14.08404 13.33393 12.64656
33 18.14765 17.02286 16.00255 15.07507 14.23023 13.45909 12.75379
34 18.41120 17.24676 16.19290 15.23703 14.36814 13.57661 12.85401
35 18.66461 17.46101 16.37419 15.39055 14.49825 13.68696 12.94767
40 19.79277 18.40158 17.15909 16.04612 15.04630 14.14553 13.33171
45 20.72004 19.15635 17.77407 16.54773 15.45583 14.48023 13.60552
50 21.48218 19.76201 18.25593 16.93152 15.76186 14.72452

13.80075

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