Answer:
1. The selling price of the bonds is $590.976.46
2 .The journal entry for the issuance of the bonds and bond issue costs would be as follows:
Debit Credit
Cash $538,976.26
Discount on bonds payable $39,023.74
Unamortized bonds issue costs $22,000
Bonds Payable $600,000
3. Assuming that Barnett uses IFRS, the journal entry for the issuance of the bonds would be as follows:
Debit Credit
Cash $600,000
Bonds Payable $600,000
Explanation:
In order to calculate the selling price of the bonds we would have to calculate first the present value of particular and present value of interest, hence:
present value of particular=($600,000×0.414643)=$248,785.80
present value of interest=$600,000×4%13.007936=$312,190.46
Therefore, selling price of the bonds=present value of particular+present value of interest
1. Selling price of the bonds=$248,785.80+$312,190.46=$590.976.46
2. The journal entry for the issuance of the bonds and bond issue costs would be as follows:
Debit Credit
Cash $538,976.26
Discount on bonds payable $39,023.74
Unamortized bonds issue costs $22,000
Bonds Payable $600,000
3. Assuming that Barnett uses IFRS, the journal entry for the issuance of the bonds would be as follows:
Debit Credit
Cash $600,000
Bonds Payable $600,000
