The notes to the Mann Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year):

Mann Ltd. amortizes bond discount by the effective-interest method and pays all interest amounts at December 31.
Requirements
1. Assume the market interest rate on January 1 of year 1, the date of issuance of the bonds, is 6%. Answer the following questions about Mann Ltd.'s long-term liabilities:
a. Using the PV function in Excel, what is the issue price of the bonds?
b. What is the maturity value of the 2% bonds?
c. What is Mann Ltd.'s annual cash interest payment on the 2% bonds?
d. What is the carrying amount of the 2% bonds at December 31, year 1?
2. Using Exhibit 9-4 as a model, prepare an amortization table through the maturity date for the 2% bonds. (Round all amounts to the nearest dollar.) How much is Mann Ltd.'s interest expense on the 2% bonds for the year ended December 31, Year 4?
3. Show how Mann Ltd. would report the 2% bonds payable and the 6% notes payable at December 31, Year 4.

Note 6. Indebtedness Bonds payable, 2% due on December 31, Year 8.. Less: Discount Notes payable, 6%, payable in $55,000 annual installmentsst $4,000,000 330,000