Karen Austin Inc. has issued three types of debt on January 1, 2014, the start of the company’s fiscal year.

(a) $10 million, 10-year, 15% unsecured bonds, interest payable quarterly. Bonds were priced to yield 12%.

(b) $25 million par of 10-year, zero-coupon bonds at a price to yield 12% per year.

(c) $20 million, 10-year, 10% mortgage bonds, interest payable annually to yield 12%.

Instructions

Prepare a schedule that identifies the following items for each bond:

(1) Maturity value,

(2) Number of interest periods over life of bond,

(3) Stated rate per each interest period,

(4) Effective-interest rate per each interest period,

(5) Payment amount per period, and

(6) Present value of bonds at date of issue.