Question

Question 4 On July 1, 2017, Global Satellites Corporation issued $1,550,000 of 10-year, 6% bonds to yield a market interest rate of 5%. The bonds pay semi-annual interest on July 1 and January 1. Global has a December 31 year end. When the bonds were issued, Global received $1,670,815 Click here to view the factor table. Prepare an amortization table through January 1, 2019 (three interest periods) for this bond issue. (Round all amounts to the nearest dollar, e.g. 5,275.) GLOBAL SATELLITES CORPORATION Bond Premium Amortization Unamortized Bond Carrying honoid Interest Expense to be promi. Semi-annual interest periods Interest to be paid ante be Premium Amortization Premium Amount Recorded July 1/17 120815 1670815 Jan. 1/18 July 1/18 Jan. 1/19 July 1/19

Answer 1

Semi	interest	interest	premium	unamortized	Bond
annual	to be	expense to	amortization	premium	Carrying
interest	paid	b recorded			value
periods
july1/17				120,815	1,670,815
jan1/18	46500	41770	4730	116085	1,666,085
july1/18	46500	41652	4848	111238	1,661,238
jan 1/19	46500	41531	4969	106268	1,656,268
july 1/19	46500	41407	5093	101175	1,651,175
Date	Account titles & Explanations				Debit	Credit
7/1/2017	cash				1,670,815
	premium on bonds payable					120,815
	Bonds payable					1,550,000
Date	Account titles & Explanations				Debit	Credit
12/31/2018	interest expense				41531
	premium on bonds payable				4969
	interest payable					46500
	Statement of financial position
Current liabilities
interest payable					46500
Non -current liabilities
Bonds payable					1,656,268
Date	Account titles & Explanations				Debit	Credit
1/1/2019	interest payable				46500
	cash					46500
the bonds issue price				1670815
n=	20 years
i=	2.50%
principal		PV
1,550,000	*	0.61027	=	945918.5
interest
46500	*	15.58916	=	724895.9
bonds issue price				1670815