Question

arces-MtSAC Grades for Selena Pina: BUSA-7-01-21606.201920 Chapter 10 Homework Homework wringham Company Saved Help Save Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completic Ret Quatro Co. issues bonds dated January 1, 2019, with a par value of $400,000. The bonds' annual contract rate is 13% , and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $409,850 1 What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare a straight-line amortization table for these bonds. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare a straight-line amortization table for these bonds. (Round your intermediate calculations to the nearest dollar amount.) Semiannual Interest Period- End Unamortized Carrying Value Premium $ 409.850 01/01/2019 9,850 8,208 6,566 4.924 06/30/2019 408,208 406,256 12/31/2019 404.614 06/30/2020 ePrev 4 of 10 Next

Answer 1

1
Premium	9850	=409850-400000
2
Total interest expense over life of bonds
6 payments of $26000	156000
Par value at maturity	400000
Total repaid	556000
Less: Amount borrowed	409850
Total bond interest expense	146150
3
Semiannual Interest period end	Unamortized Premium	Carrying value
01/01/2019	9850	409850
06/30/2019	8208	408208
12/31/2019	6566	406566
06/30/2020	4924	404924
12/31/2020	3282	403282
06/30/2021	1640	401640
12/31/2021	0	400000
Workings:
Semiannual Interest payment	26000	=400000*13%/2
Semiannual premium amortization	1642	=9850/6