On June 1, 2014, JetCom Inc. issued a $540,000 12%, three-year bond. Interest is to be paid

Question:

On June 1, 2014, JetCom Inc. issued a $540,000 12%, three-year bond. Interest is to be paid semi-annually beginning December 1, 2014.

Required
a. Calculate the issue price of the bond assuming a market interest rate of 13%.
b. Using the effective interest method, prepare an amortization schedule similar to Exhibit 15.10.