Face Value = $700,000
Proceed from Issuance = $643,419
Discount on Bonds Payable = Face Value - Proceed from
Issuance
Discount on Bonds Payable = $700,000 - $643,419
Discount on Bonds Payable = $56,581
Annual Coupon Rate = 7.50%
Semiannual Coupon Rate = 3.75%
Semiannual Coupon = $700,000 * 3.75%
Semiannual Coupon = $26,250
Semiannual Periods = 8 (4 years)
Semiannual Amortization of Discount = Discount on Bonds Payable
/ Semiannual Periods
Semiannual Amortization of Discount = $56,581 / 8
Semiannual Amortization of Discount = $7,073
Semiannual Interest Expense = Semiannual Coupon + Semiannual
Amortization of Discount
Semiannual Interest Expense = $26,250 + $7,073
Semiannual Interest Expense = $33,323
Answer 1.
Answer 2.
Answer 3.
Answer 4.
Required information Problem 10-5A Straight-Line: Amortization of bond premium and discount LO P1, P2, P3 The...
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