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.)
Homework Answers
| 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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