AC312 - Bonds Excel Project

You must complete your work in Excel using formulas. Please submit your Excel file as an attachment to the link provided in the classroom.

Situation:

BU Curriculum Corporation issued $800,000 of 8% bonds on August 1, 2020, due on August 1, 2025. The interest is to be paid twice a year on February 1 and August 1. The bonds were sold to yield 10% effective annual interest. BU Curriculum Corporation closes its books annually on December 31.

(a) Complete an amortization schedule for the above bond (for all periods) in a similar format as below using Excel. You can round to the nearest dollar or penny. Use the effective-interest method.

Date	Credit Cash	Debit Interest Expense	Credit Bond Discount	Carrying Amount of Bonds
Aug. 1, 2020				Use the NPV or PV formula in Excel; see posted bond excel sheet in the classroom
Feb. 1, 2021 .continue schedule (use Excel)

(b) Prepare the journal entries for the following:

1. August 1, 2020 bond issue

2. Adjusting entry for December 31, 2020 (adjusting entry should cover 5 months)

3. February 1, 2021 entry

4. August 1, 2021 entry

5. Adjusting entry from December 31, 2021

6. February 1, 2022 entry

(c) Compute the interest expense to be reported in the income statement for the year

ended December 31, 2020 and December 31, 2021.

(d) Complete an amortization schedule for the above bond (for all periods) using the straight-line amortization method (entries are not required).

Grading Rubric:

Requirement (a) 45 pts.	Effective Interest Table	Formulas, Clear Headings, etc.
Requirement (b) 35 pts.	Entries	Correct accounts, dollars, formatting, etc.
Requirement (c) 10 pts.	Interest Expense Calc.	Correct analysis (show work)
Requirement (d) 10 pts.	Straight-line Table	Formulas, Headings, etc.