Answer:
January 1, 2021
Dr Investment in bonds $176 million
Cr Discount in Investment in bonds $24,226,136
Dr Cash $151,773,864
June 30, 2021
Dr Cash $8,800,000
Dr Discount in Investment in bonds $897,538
Cr Interest Revenue $9,607,538
December 31, 2028
Dr Cash $8,800,000
Dr Discount in Investment in bonds $897,538
Cr Interest Revenue $9,607,538
Explanation:
1. to 3. Preparation of the journal entries to record the purchase of the bonds by Wang Communications on January 1, 2021, interest revenue on June 30, 2021 and interest revenue on December 31, 2028
January 1, 2021
Dr Investment in bonds $176 million
Cr Discount in Investment in bonds $24,226,136
($151,773,864-$176 million)
Dr Cash $151,773,864
(To record purchase of bonds)
June 30, 2021
Dr Cash $8,800,000
($176 million*10%/2)
Dr Discount in Investment in bonds $897,538
($24,226,136/30)
Cr Interest Revenue $9,607,538
($8,800,000+$897,538)
(To record Interest Revenue)
December 31, 2028
Dr Cash $8,800,000
($176 million*10%/2)
Dr Discount in Investment in bonds $897,538
($24,226,136/30)
Cr Interest Revenue $9,607,538
($8,800,000+$897,538)
(To record Interest Revenue)
Present value of an ordinary annuity of $1 n=30 I=6%
Present value of an ordinary annuity of $1 =13.76483
Present value of $1 n=30 I=6%
Present value of $1=0.17411
Interest ($176 million *5%*13.76483) $121,130,504
Principal ($176 million*0.17411) $30,643,350
=$151,773,864
