a.

PV of the Principal =

PV of the Interest =

Selling Price =

b. Cash Payment
Payment Date
(0,045 x 800.000.000)

31 July 2015 36,000,000.00

31 January 2016 36,000,000.00
31 July 2016 36,000,000.00
31 January 2017 36,000,000.00
31 July 2017 36,000,000.00
31 January 2018 36,000,000.00
31 July 2018 36,000,000.00
31 January 2019 36,000,000.00
288,000,000.00

c. Bonds Issuance

1 February 2015 Cash

Discount on Bonds Payable
Bonds Payable

Payment of Bonds Interest Expense and Adjusting Entries

31 July 2015 Interest Expense

Discount on Bonds Payable
Cash

31 December 2015 Interest Expense

Discount on Bonds Payable
Interest Payable

31 January 2016 Interest Expense

Interest Payable
Discount on Bonds Payable
Cash

31 July 2016 Interest Expense

Discount on Bonds Payable
Cash

31 December 2016 Interest Expense

Discount on Bonds Payable
 Interest Payable

31 January 2017 Interest Expense

Interest Payable
Discount on Bonds Payable
Cash

31 July 2017 Interest Expense

Discount on Bonds Payable
Cash

31 December 2017 Interest Expense

Discount on Bonds Payable
Interest Payable

31 January 2018 Interest Expense

Interest Payable
Discount on Bonds Payable
Cash

31 July 2018 Interest Expense

Discount on Bonds Payable
Cash

31 December 2018 Interest Expense

Discount on Bonds Payable
Interest Payable

31 January 2019 Interest Expense

Interest Payable
Discount on Bonds Payable
Cash

Repayment of Bonds at Maturity Date

31 January 2019 Bonds Payable

Cash

d. Statement of Financial Position

Bonds Payable
Less : Discount on Bonds Payable
Initial Balance, 1 February 2015
31 July 2015 Discount Amortization
31 December 2015 Discount Amortization
31 December 2015 Net Liability

Income Statement
 31 July 2015 Interest Expense
31 December 2015 Interest Expense
Interest Expense for 2015

Statement of Cash Flows

Cash Flows from Financing Activities :

Issue of Bonds Payable

e. 31 July 2017 Interest Expense

Discount on Bonds Payable
Cash

31 July 2017 Bonds Payable

Gain on Early Extinguishment
Discount on Bonds Payable
Cash
 800,000,000 x 〖 (1+0,05) 〗 ^(−8) =

36,000,000 x 〖 1−(1+0,05) 〗 ^(−8) =

0.05

541,471,490 + 232,675,659 =

Effective Interest Increase in Outstanding

(0,05 x Outstanding Balance) Balance Balance
774,147,148.96
38,707,357.45 2,707,357.45 776,854,506.41
38,842,725.32 2,842,725.32 779,697,231.73
38,984,861.59 2,984,861.59 782,682,093.32
39,134,104.67 3,134,104.67 785,816,197.98
39,290,809.90 3,290,809.90 789,107,007.88
39,455,350.39 3,455,350.39 792,562,358.28
39,628,117.91 3,628,117.91 796,190,476.19
39,809,523.81 3,809,523.81 800,000,000.00
313,852,851.04 25,852,851.04

774,147,148.96
25,852,851.04
800,000,000

ntries

38,707,357.45
2,707,357.45
36,000,000.00

32,368,937.77
2,368,937.77
30,000,000.00

6,473,787.55
30,000,000.00
473,787.55
36,000,000.00

38,984,861.59
2,984,861.59
36,000,000.00

32,611,753.89
2,611,753.89
 30,000,000.00

6,522,350.78
30,000,000.00
522,350.78
36,000,000.00

39,290,809.90
3,290,809.90
36,000,000.00

32,879,458.66
2,879,458.66
30,000,000.00

6,575,891.73
30,000,000.00
575,891.73
36,000,000.00

39,628,117.91
3,628,117.91
36,000,000.00

33,174,603.17
3,174,603.17
30,000,000.00

6,634,920.63
30,000,000.00
634,920.63
36,000,000.00

800,000,000.00
800,000,000.00

800,000,000
(25,852,851.04)
774,147,148.96
2,707,357.45
2,368,937.77
779,223,444.18
 38,707,357.45
32,368,937.77
71,076,295.22

774,147,148.96

39,290,809.90
3,290,809.90
36,000,000.00

800,000,000.00
6,107,007.88
10,892,992.12
783,000,000.00
541,471,489.62

232,675,659.34

774,147,148.96