Question

Tahoe Tent ud issued bonds with a par value of $803,000 on January 1 2017 The annual contract rate on the bonds was 13.50%, and the interest is paid semiannually. The bonds mature after three years. The annual market interest rate at the date of issuance was 11.50%, and the bonds were sold for $842,798 a. What is the amount of the orginal premium on these bonds (Use financial calculator for calculating PV's. Premium / b. How much total bond interest expense will be recognized over the life of these bonds? (Do not round intermediate Round the final answer to the nearest whole dollar.) Total interest expense (Do not round intermediate calculations. Round the final answers to the nearest whole C. Present an amortization table for these bonds, use the effective interest method of allocating the interest and amortizing dollar. Enter all the amounts as positive values.) Period Ending Cash Interest Paid Period Interest Expense Premium Amort Unamortized Carrying Value Premium Jan 1/17 June 30/17 Dec 31/17 June 30/18 Dec 31/18 June 30/19 Dec 31/19 Totals

Answer 1

Premium total interest Expenses 39798 285417 Year Caah Paid Jan 1/17 June 30/17 54203 Dec 31/17 54203 June 30/18 54203 Dec 31/18 54203 June 30/19 54203 Dec 31/19 54203 Totals Cash Paid = 803000*13.50%*6/12 Interest Expenses= 842798*11.50%*6/12 Period Interet Expenses 0 48461 48131 47782 47412 47022 46609 285417 54203 Premium Unamortized Carrying Amortised Premium Value 0 39798 842798 5742 3 4056 837056 6072 27985 830985 6421 824564 6790 14774 817774 7181 7593 810593 7593 0 803000 39798

Face value of the Bond 803000 842798 39798 Premium on bonds Payable Total Bond interest Expenses over the lifeof the bond Amount Repaid: 6 Payment of Par value at Marturiy Total repaid Less amount borrowed Total interest Expenses 325215 803000 1128215 842798 285417