On January 1, 2021, Splish Co. issued ten-year bonds with a face value of $6,200,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:
Present value of 1 for 10 periods at 10% | 0.386 | ||
Present value of 1 for 10 periods at 12% | 0.322 | ||
Present value of 1 for 20 periods at 5% | 0.377 | ||
Present value of 1 for 20 periods at 6% | 0.312 | ||
Present value of annuity for 10 periods at 10% | 6.145 | ||
Present value of annuity for 10 periods at 12% | 5.650 | ||
Present value of annuity for 20 periods at 5% | 12.462 | ||
Present value of annuity for 20 periods at 6% | 11.470 |
Without prejudice to your solution in part (a), assume that the
issue price was $5,480,800. Prepare the amortization table for
2021, assuming that amortization is recorded on interest payment
dates using the effective-interest method.
Date | Cash | Expense | Amortization | Carrying Amount |
1/1/18 | $ | |||
6/30/18 | $ | $ | ||
12/31/18 |
repare the amortization table for 2021, assuming that amortization is recorded on interest payment dates using the effective-interest method.
Date | Cash | Expense | Amortization | Carrying Amount |
1/1/18 | $5480800 | |||
6/30/18 | $310000 | $
328848 |
18848 |
5499648 |
12/31/18 |
310000 |
329979 |
19979 |
5519627 |
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