Question

I need help on 3,4 and 5, thanks!

Use the following information to Newer questions - On January 1, 2019, a corporation is 10000 10 hands for $81.771. The boods pay interesse annually on June 10 and Desember 1 The o the following the prepare a bond amortization schedule and answer the first five questions. (Round your answers to the nearest 5) 20 581,750 Int Exp Amortization Schedule Cash intent from Amori CV styment is made olun 20301 - 20p What is the carrying value of the bond wer the third P-63% A 5571,543 :49 2% A $75.063 07 R $455.000 a FVS SS71473 x uts 2 1,331 ProD What is the amount of more expense to be reported December 31, 2020? PV?R 2o disct omkE5817 Impsun 150 e the s t for the $11.429 B521200 C. 50.000 D. $22.928 What is the amount of conteres puid for the ended December 2010 A $30,000 $20.000 $24271 $14,906 $22.928 D E What is the amount of the December 31, 2020? amortized discount o premier the rest Exo 11,345 Int Exp A $65,417 B. $46,131 S $60,000 o 567.902 E $35,640 Premium 3635 Cash 15000 5. What is the total cost to borrow over the life of the bond? A $281.771 B. $118.229 C S300.000 D. 5381.771 E. $218.229 In

Answer 1

Solution Face value of Bonds $500,000 Issue price of Bonds $581,771 Premium on issue of Bonds ($581,771 -$500,000) $81,771 Stated rate of interest 6.00% Market rate of interest 4.00% Interest payment frequency Semi-annually Bonds maturity period/Bonds life 10 years Total no. of coupon payments till maturity (10 Years x 2) 20 Semi-Annual interest payment Face value x Stated rate of interest/2 $500,000 x 6%/2 = $15,000 Bond Amortization Table Bonds sold to Market Yield Carrying Cash Premium Unamortized Interest Date Amortized Premium Value payment expense 01/01/2019 $81,771 $78,406 $74,974 $581,771 06/30/2019 12/31/2019 $15,000 $11,635 $3,365 $578,406 $15,000 $15,000 $15,000 $11,568 $3,432 $574,974 06/30/2020 $11,499 $3,501 $71,473 $571,473 $567,902 $564,260 $560,545 $556,756 12/31/2020 $11,429 $3,571 $67,902 06/30/2021 12/31/2021 $15,000 $11,358 $3,642 $64,260 $60,545 $56,756 $15,000 $15,000 $15,000 $15,000 $15,000 $11,285 $3,715 06/30/2022 12/31/2022 06/30/2023 $11,211 $11,135 $3,789 $3,865 $52,891 $552,891 $548,949 $544,928 $11,058 $3,942 $48,949 $44,928 12/31/2023 $10,979 $10,899 $4,021 06/30/2024 12/31/2024 $15,000 $4,101 $40,827 $540,827 $15,000 $15,000 $10,817 $4,183 $36,644 $536,644 06/30/2025 12/31/2025 $10,733 $10,648 $10,561 $4,267 $32,377 $28,025 $23,586 $19,058 $532,377 $15,000 $15,000 $15,000 $15,000 $4,352 $528,025 06/30/2026 12/31/2026 $4,439 $523,586 $519,058 $10,472 $4,528 $4,619 $4,711 $4,805 06/30/2027 $10,381 $14,439 $514,439 12/31/2027 06/30/2028 $15,000 $15,000 $15,000 $10,289 $9,728 $509,728 $504,923 $500,000 $10,195 $10,077 $4,923 $0 12/31/2028 $4,923

Question 1 Carrying value of the Bonds after the third interest payment made $571,473 Question 2 Interest expense to be reported for the Y/E Dec. 31, 2020 Interest expense for the period ended June 30, 2020 $11,499 Interest expense for the period ended Dec 31, 2020 $11,429 Total Interest expenses to be reported for the Y/E Dec. 31, 2020 $22,928 Question 3 Amount of cash interest paid for the Y/E December 31, 2019 Cash interest paid for the period ended June 30, 2019 $15,000 Cash interest paid for the period ended Dec. 31, 2019 $15,000 Total cash interest paid for the Y/E Decmber 31, 2019 $30,000 Question 4 Unamortized premium on December 31, 2020 $67,902 Question 5 Total cost to borrow over the life of the bond Total cash interest paid over the life of Bond ($15,000 x 20) $300,000 Repayment of Bond on maturity $500,000 Total cash paid $800,000 ($581,771) $218,229 Less: Amount received on issue of bonds (Bond issue price) Total cost to borrow over the life of the bond

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B C D E F G Solution 3 Face value of Bonds 500000 581771 4 Issue price of Bonds Premium on issue of Bonds ($581,771 - $500,000) G4-G3 6 Stated rate of interest 0.06 Market rate of interest 7 0.04 Interest payment frequency Semi-annually Bonds maturity period/Bonds life 10 years 10 Total no. of coupon payments till maturity (10 Years x 2) 20 11 Semi-Annual interest payment Face value x Stated rate of interest/2 $500,000 x 6%/2 G3 .G6 / 2 12 13 14 15

A B C D E G Bond Amortization Table 16 Bonds sold to Market Yield 17 Unamortized Premium Carrying Cash Interest expense Date Amortized Premium Value payment 18 G3+F19 -G19-E20 -G20-E21 01/01/2019 06/30/2019-SES14 12/31/2019-SES14 06/30/2020 -SE$14 12/31/2020-SES14 06/30/2021-SES14 12/31/2021 SE$14 06/30/2022 SE$14 12/31/2022 SE$14 06/30/2023 $E$14 12/31/2023 SE$14 06/30/2024 -SE$14 12/31/2024-SES14 06/30/2025-SE$14 12/31/2025-SES14 06/30/2026-SES14 12/31/2026-SES14 06/30/2027 $E$14 12/31/2027 SE$14 06/30/2028 -SE$14 12/31/2028 -SES14 -G5 -F19- E20 =F20-E21 =F21-E22 - F22-E23 -F23- E24 -F24-E25 -F25-E26 -F26- E27 =F27-E28 -F28-E29 =F29-E30 F30-E31 -F31- E32 - F32-E33 -F33- E34 -F34-E35 =F35-E36 -F36-E37 19 -ROUND (G19 $G$7/2,0) =ROUND(G20 SG$7/2,0) =ROUND(G21 $G$7/2,0) -ROUND(G22 $G$7/2,0) -ROUND (G23$G$7/2,0) -ROUND (G24 $G$7/2,0) -ROUND (G25 $G$7/2,0) -ROUND (G26.$G$7/2,0) -ROUND (G27 $G$7/2,0) -ROUND(G28.$G$7/2,0) =ROUND(G29 $G$7/2,0) =ROUND(G30 $G$7/2,0) =ROUND(G31 $G$7/2,0) - ROUND(G32 $G$7/2,0) -ROUND (G33$G$7/2,0) -ROUND (G34.$G$7/2,0) -ROUND (G35.$G$7/2,0) -ROUND (G36.$G$7/2,0) =ROUND(G37 $G$7/2,0) = ROUND (G38 SG$7/2,0)-21 C39-D39 -C20-D20 -C21 -D21 -C22-D22 -C23-D23 - C24- D24 -C25-D25 -C26-D26 -C27-D27 -C28- D28 C29-D29 C30-D30 -C31-D31 -C32-D32 -С33-D33 - C34- D34 -С35-D35 ЕС36-D36 |-С37-D37 C38-D38 20 21 22 G21-E22 G22-E23 -G23-E24 -G24-E25 23 24 25 26 -G25- E26 -G26-E27 -G27 - E28 27 28 -G28-E29 -G29-E30 -G30-E31 -G31 - E32 -G32-E33 G33-E34 -G34-E35 -G35 - E36 -G36 - E37 29 30 31 32 33 34 35 36 37 -G37-E38 -G38- E39 38 F37-E38 -F38- E39 39 40 Question 1 41 42 43 Carrying value of the Bonds after the third interest payment made -G22

A B C D E G 44 Question 2 45 46 Interest expense to be reported for the Y/E Dec. 31, 2020 47 48 Interest expense for the period ended June 30, 2020 Interest expense for the period ended Dec 31, 2020 Total Interest expenses to be reported for the Y/E Dec. 31, 2020 -D22 49 -D23 50 -SUM(G48:G49) 51 Question 3 52 53 Amount of cash interest paid for the Y/E December 31, 2019 54 55 Cash interest paid for the period ended June 30, 2019 Cash interest paid for the period ended Dec. 31, 2019 Total cash interest paid for the Y/E Decmber 31, 2019 -C20 C21 56 -SUM(G55:G56) 57 58 Question 4 59 60 Unamortized premium on December 31, 2020 61 =F23 62 Question 5 63 64 Total cost to borrow over the life of the bond Total cash interest paid over the life of Bond ($15,000 x 20) 65 66 - 15000 20 67 Repayment of Bond on maturity Total cash paid Less: Amount received on issue of bondss (Bond issue price) -500000 -SUM(G66:G67) -G4 68 69 Total cost to borrow over the life of the bond -G68+G69 70 71