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Chapter 10 HW 2 Problem 10-9AB Effective Interest: Amortization of b ond premium; computing bond price LO P1, P6 dated January 1,2017, with a $460000 par value The bonds pay interest on June 30 and December aatleet laten2 labrnird lableRa Elis issues 65%, tive-year bonds rd are issued at a priceof S4698 2 The annualmeket tate s 6% onthe issue date. (Use appropriate facsoris) from the tables provided Required 1. Compute the total bond interest expense over the 2 Prepare an effective interest amortization table for the bonds life 3. Prepare the journal entries to record the first two interest bonds Ife at issuance to compute the present value of the remaining cash fows for these bonds as of December 31, 2019 ate Complete this qwestion by entering your answers in the tobs bel Compute the total bond interest expense over the bonds ife
Chapter 10 Hw pter t0 HW 2 Problem 10-9AB Effective Interest: Amortization of bond premium; computing bond price LO P1, P6 Elis issues 65%, five-year bonds dated January 1, 2or7, with a $460,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $469,812. The annual market rate is 6% on the issue date. dableBI, lableB2.lableB3, and lableBo Use appropriate fectorts) from the tables provided.) 1. Compute the total bond interest expense over the bonds Ife 2. Prepare an effective interest amortization table for the bonds life 3. Prepare the journal entries to record the first two interest payments 4. Use the market rate at issuance to compute the present value of the remaining cash flows for these bonds as of December 31, 2019 Complete this question by entering your answers in the tabs below. Required 1 equired 2 Required 3 Required Prepare an effective leterest amortization table for the bonds life. 12/312017 06/30/2018 12312018 05/302015 231/201 06/30/2020 2/31/2022 12912021 くPray 20, 211 here to search
oard Learn Chapter 10 Hw registration%2Fsign ter 10 Hw Problem 10-9AB Effective Interest: Amortization of bond premium; computing bond price LO P1, P6 Elis issues 65%, five-year bonds dated January 1, 2017, wit a$460000 par vaue. The bonds pay interest on June 30 and December 31 and are issued at a price of S469,812. The annual market rate is 6% on the issue date, aable TableB2 lableea and lableR4 (Use appropriate factoris) from the tobles provided) Required: 1. Compute the total bond interest expense over the bonds life 2. Prepare an effective interest amortization table for the bonds life 3. Prepare the journal entries to record the first two interest payments 4. Use the market rate at issuance to compute the present value ofthe renang ash flows for these bonds as of December 3t, 20a Complete this question by entering your answers in the tabs below equired 1Required 2 Required 3 Required4 Prepare the journal entries to record the first tiwo interest payments Date Journal /Jun 30 201 un 30 2017 Bond interest expense Premium on bonds payable Cash 2Dec 31 2017 Bond interest expense Premium on bonds payable Cash Required 2
ackbord Imam × Chapter 10HW hapter 10 HW 2 Problem 10-9AB Effective Interest: Amortization of bond premium; computing bond price LO P1, P6 Elis issues 65%, five-year bonds dated January 1, 20t, with a S460000 par vaue. The bonds pay interest on June 30 and December 31and are issued at a price of SA69812 The annual market rate is 6% on the issue date (Use oppropriate factoris) from the tables provided.) ClableAtlablER2. IableBa and Table84 Required: 1. Compute the total bond interest expense over the 2. Prepare an effective interest amortization table for the bonds Me 3. Prepare the journal entries to record the first two interest payments 4. Use the market rate at issuance to compute the present value of the remaining cash flows for these bonds as of December 31.2019 bonds life Complete this question by entering your answers in the tabs below. References Required 1 Required 2 Reured 3 qui issuance to compute the present value of the remaining cash flows for these bonds as of December 31 Use the market rate at 2019. (Round table values to 4 decimal places, and use rounded values in all calculations h Flow Amount Par (maturity) v Interest (annuity) Price of bonds
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Answer #1

Answer 1.

Face Value of Bonds = $460,000

Annual Coupon Rate = 6.50%
Semiannual Coupon Rate = 3.25%
Semiannual Coupon = 3.25% * $460,000
Semiannual Coupon = $14,950

Time to Maturity = 5 years
Semiannual Period = 10

Total bond interest expense over life of bonds Amount repa id: 10 payments of 14950 Par value at maturity Total repaid Less: amount borrowed Total bond interest expense 149500 460000 609500 469812 139688

Answer 2.

Annual Interest Rate = 6%
Semiannual Interest Rate = 3%

Semiannua Cash Interest Bond Interest Premium Unamortized Period End 01/01/2017 06/30/2017 12/31/2017 06/30/2018 12/31/2018 06/30/2019 12/31/2019 06/30/2020 12/31/2020 06/30/2021 12/31/2021 Carrying Value 469812 468956 468075 467167 466232 465269 464277 463255 462203 461119 460000 Paid Amortization Premium 9812 8956 8075 7167 6232 5269 4277 3255 2203 1119 0 Expense 14950 14950 14950 14950 14950 14950 14950 14950 14950 14950 149500 14094 14069 14042 14015 13987 13958 13928 13898 13866 13831 139688 856 881 908 935 963 992 1022 1052 1084 1119 9812 Totals

Answer 3.

GeneralJournal Debit 14,094 856 Date Credit June 30, 2017 Interest Expense Premium on Bonds Payable Cash 14,950 14,069 881 Dec. 31, 2017 Interest Expense Premium on Bonds Payable Cash 14,950

Answer 4.

Table Values are Based on: 4. 3% Table Value 0.88849 Cash Flow Par (maturity) value Interest (annuity) Price of bonds Amount Present Value 460000 14950 408706 55571 464277

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