On October 1, 2023, Best Biopharma Inc. issued an $850,000, 11%, seven-year bond. Interest is to be
Question:
On October 1, 2023, Best Biopharma Inc. issued an $850,000, 11%, seven-year bond. Interest is to be paid annually each October 1.
Required
a. Calculate the issue price of the bond assuming a market interest rate of 9%.
b. Using the effective interest method, prepare an amortization schedule similar to Exhibit 14.16 using the effective interest method.
Transcribed Image Text:
Period Ending Dec. 31/23 Dec. 31/24 Dec. 31/25 Dec. 31/26 Dec. 31/27 Totals (A) Cash Interest Paid $50,000 x 14% $ 7,000 7,000 7,000 7,000 $28,000 (B) Period Interest Expense (E) * 12% $ 6,3641 6,2882 6,203 6,1093 $24,964 (C) Premium Amort. (A) - (B) $ 636 712 797 891 $3,036 (D) Unamortized Premium $3,036 2,400 1,688 891 -0- (E) Carrying Value $50,000 + (D) $53,036 52,400 51,688 50,891 50,000
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a PV of face amount from Table 14A1 PV of interest annuity from Table 14A2 850000 11 93500 U...View the full answer
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Related Book For
Fundamental Accounting Principles Volume 2
ISBN: 9781260881332
17th Canadian Edition
Authors: Kermit D. Larson, Heidi Dieckmann, John Harris
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