On January 1, 20x1, Smith Company issued $15,000,000 of 30-year, 4% bonds, with interest payable annually on
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- On January 1, 20x1, Smith Company issued $15,000,000 of 30-year, 4% bonds, with interest payable annually on December 31 of each year. The bonds were sold at an effective rate of 2% for $21,718,937.
- a. How much interest will be paid to bondholders every year?
- b. Consider the bond amortization schedule for 20x1 (the year of issuance). How much interest expense would be shown on the 20x1 income statement? Show your calculations
- c. Again consider the 20x1 amortization schedule. By how much would the premium or discount be amortized in 20x1? Show your calculations.
- d. Continue to consider the 20x1 amortization schedule. What would the carrying value of the bonds be on the 20x1 year-end balance sheet? Show your calculations.
- e. After the last annual interest payment and amortization of the discount or premium, what will the carrying value of the bonds be?
Related Book For
Intermediate Accounting Reporting and Analysis
ISBN: 978-1285453828
2nd edition
Authors: James M. Wahlen, Jefferson P. Jones, Donald Pagach
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