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ACC 311 Quiz 8

# ACC 311 Quiz 8 - ACC 311(Atiase Name KEY(25 points Quiz#8A...

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ACC 311 (Atiase) Name: KEY (25 points) Quiz #8A 11/18/8010 Class Time: 9:30 and 11:00am On January 1, 2004, Lowry Co. issued ten-year bonds with a face value of \$200,000 and a stated interest rate of 10%, payable semi-annually on June 30 and December 31. The bonds were sold to yield 12%. Table values are: Present value of 1 for 10 periods at 10% .................................... .386 Present value of 1 for 10 periods at 12% .................................... .322 Present value of 1 for 20 periods at 5% ...................................... .377 Present value of 1 for 20 periods at 6% ...................................... .312 Present value of annuity for 10 periods at 10% .......................... 6.145 Present value of annuity for 10 periods at 12% .......................... 5.650 Present value of annuity for 20 periods at 5% ............................ 12.462 Present value of annuity for 20 periods at 6% ............................ 11.470 Instructions (A) Calculate the issue price of the bonds. PV of annuity if interest payments (5%*200,000), n=20; i=6% 10,000*11.470 114,700 (2 points) PV of principal of \$200,000; n=20;i=6% 200,000*0.312 62,400 (2 points) 177,100 (B) Prepare the journal entry to record the issuance of the bonds on January 1, 2004. (2 points for correct accounts) Dr Cr Cash 177,100 Bonds Payable 177,100 © Without prejudice to your solution in part (a), assume that the issue price was \$180,000.

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ACC 311 Quiz 8 - ACC 311(Atiase Name KEY(25 points Quiz#8A...

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