Question

Chapter 10 Homework A Saved Tano issues bonds with a par value of $99,000 on January 1, 2018. The bonds' annual contract rate is 6%, 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 8%, and the bonds are sold for $93,809. points 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare an amortization table using the straight-line method to amortize the discount for these bonds. eBook Complete this question by entering your answers in the tabs below. Hint Required i Required 2 Required 3 What is the amount of the discount on these bonds at issuance? Print Discount References < Required 1 Required 2 >

Answer 1

1)	Discount		5191
2)	total bond interest expense over life of bonds:
	Amount repaid:
	6	payments of		2970	17820
	par value at maturity				99,000
	total repaid				116820
	less amount borrowed				-93,809
	total bond interest expense.				23011
3)	Semi annual period		unamortized		Carrying
	end		Discount		value
	1/1/2018		5191		93,809
	6/30/2018		4326		94,674
	12/30/2018		3461		95,539
	6/30/2019		2596		96,405
	12/30/2019		1730		97,270
	6/30/2020		865		98,135
	12/30/2020		0		99,000
	discount amortized (straight line) = 5191/6
				865.1667