Viking Voyager specializes in the design and production of replica Viking boats. On January 1, the company issues $ 3,000,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 8%. Antique Boat World, one of Viking Voyager’s best customers, purchases 15% of the bond issue ($ 450,000 face amount) at a discount for $ 419,422.

1. Complete the first three rows of an amortization table for Antique Boat World.
2. Record the purchase of the bonds by Antique Boat World and the receipt of the first two semiannual interest payments on June 30 and December 31.
3. Record the sale of the bonds by Antique Boat World on December 31 for $ 415,000.
4. What happened to market interest rates between the beginning and end of the year?

  • CreatedJuly 15, 2014
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