Edna Company issues a 5 year, 5% face rate $100,000 bond on January 1, 2016, with...
Edna Company issues a 5 year, 5% face rate $100,000 bond on January 1, 2016, with interest payable each December 31. The bond is sold to yield 5.2% annual and the issue costs are $200.
- Calculate the price at which the bond sold on the market.
- Calculate the bond’s effective interest rate (including issue costs.
- Prepare an amortization table covering 2016 and 2017
- All of the bonds are retired on July 1, 2017. The price paid reflects a market interest rate of 5.4%
Calculate the price paid for the bond
Calculate the gain of loss on retirement
Record the entry to retire the bonds
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Debit |
Credit |
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Homework Answers
Bond Selling Price is $ 99138.87
effective interest rate is $ 5200
| Face Value | $100,000.00 | |||
| Annual Interest. | 0.05 | |||
| Periods | 5 | |||
| Period | Starting Balance | Principal | Interest | Ending Balance |
| 1 | $100,000.00 | -$18,097.48 | -$5,000.00 | $81,902.52 |
| 2 | 81902.52019 | -$19,002.35 | -$4,095.13 | $62,900.17 |
| 3 | 62900.16638 | -$19,952.47 | -$3,145.01 | $42,947.69 |
| 4 | 42947.69489 | -$20,950.10 | -$2,147.38 | $21,997.60 |
| 5 | 21997.59982 | -$21,997.60 | -$1,099.88 | $0.00 |
Price paid for the bond is - $ 100564.57
Loss $ 281.62
| Bonds payable | 100,000 | |
| Loss on retirement of bonds | 281.62 | |
| Cash | 100,000 | |
| Discount of bonds | 281.62 |
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