Bonds Payable amount reflected in balance sheet = $2192890
Face Value = $2000000
Coupon Rate = 10%
Maturity Period = 10 years
Number of compounding = 2
Interest = $2000000 * 10% * 6/12 = $100000
Period = 2 * 10 = 20
Maturity Value = Face Value = $2000000
Market Interest Rate semiannually = 0.085 / 2 = 0.0425
Market Value = Present Value of Future Cash Flows
= PV of Interest + PV of maturity value
= (Interest * PVAF (4.25%, 20)) + (Maturity Value * PVIF (4.25%, 20))
= (100000 * 13.29437) + (2000000 * 0.434989)
= $1329437 + $869978
= $2199415
Since market value is greater than face value, we can say that bonds are issued at a premium.
Premium = $2199415 - $2000000 = $199415
Journal Entry to record the issuance of bonds:
Cash a/c Dr $2199415
To Bonds Payable a/c $2000000
To Premium on the issue of bonds $199415
Bonds Payable amount is a liability account that carries the quantity owed to bondholders by way of the company. This account usually seems in the lengthy-term liabilities section of the stability sheet, on account that bonds usually mature in more than one year.
Learn more about Bonds Payable amount here: brainly.com/question/7158291
#SPJ4
