Ike issues $180,000 three-year 11% bonds dated January 1, 2019, which pay interest semiannually on June 30
Question:
Ike issues $180,000 three-year 11% bonds dated January 1, 2019, which pay interest semiannually on June 30 and December 31. They are issued at $184,565. When the market rate is 10%.
A) Register the issue of bonds with a nominal value of $180,000 on January 1, 2019 at an issue price of $184,565.
|
B) Complete the following table to calculate the total interest expense of the bonds that will be recognized over the life of the bonds.
Amount reimbursed:
_____ payments of ______
Face value at maturity ________
Total paid _______
Less amount borrowed _______
Total bond interest expense $_______
C) Prepare an effective interest amortization table for the first two years of the bonds.
End of semi-annual interest period | Cash interest paid | Bond interest expense | PremiumAmortization | unamortized premium | transport value |
01/01/19 | |||||
30/06/19 | |||||
31/12/2019 | |||||
30/06/20 | |||||
31/12/20 |
D) me. Record the first interest payment on June 30.
ii. Record the second interest payment on December 31.
Fundamental accounting principle
ISBN: 978-0078025587
21st edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta