On January 1, 2021, Vacation Destinations issues $40 million of bonds that pay interest semiannually on June

Question:

On January 1, 2021, Vacation Destinations issues $40 million of bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:

(1) (2) Cash Paid (3) (4) Increase in (5) Carrying Value Interest Date for Interest Expense Carrying Value 1/1/2021 $37,281,935 6/30/2021 $1,400,000 $1,491,277 $91,277 37,373,212 12/31/2021 1,400,000 1,494,928 94,928 37,468,140


Required:

1. Were the bonds issued at face amount, a discount, or a premium?

2. What is the original issue price of the bonds?

3. What is the face amount of the bonds?

4. What is the stated annual interest rate?

5. What is the market annual interest rate?

6. What is the total cash paid for interest assuming the bonds mature in 10 years?

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Related Book For  book-img-for-question

Financial Accounting

ISBN: 978-1259914898

5th edition

Authors: David Spiceland, Wayne M. Thomas, Don Herrmann

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