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On January 1, 2021, Splash City issues $320,000 of 8% bonds, due in 15 years, with...

On January 1, 2021, Splash City issues $320,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. The market interest rate on the issue date is 9% and the bonds issued at $293,938.

Required:

1.
Using an amortization schedule, show that the bonds have a carrying value of $295,765 on December 31, 2022. (Round Interest expense to nearest whole dollar.)

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Answer #1
increase
4.00% 4.5% in carrying
Date Cash interest value Carrying
paid expense value
1/1/2021 293,938
6/30/2021 12800 13227 427 294365
12/31/2021 12800 13246 446 294812
6/30/2022 12800 13267 467 295278
12/31/2022 12,800 13287 487 295765
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