Question

pter 10 Homework Ellis issues 70%, five year bonds dated January 1, 2018, with a $510,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $531755. The annual market rate is 6% on the issue date. (Table B1. Table B.2. Table B3, and Table 8.4) (Use appropriate factor(s) from the tables provided.) Required: 1. Compute the total bond interest expense over the bonds' life. 2. Prepare an effective interest amortization table for the bonds' life. 3. Prepare the journal entries to record the first two interest payments. 4. Use the market rate at issuance to compute the present value of the remaining cash flows for these bonds as of December 31 2020. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Use the market rate at Issuance to compute the present value of the remaining cash flows for these bonds as of December 31 2020. (Round table values to 4 decimal places, and use rounded values in all calculations.) Table values are based on: Cash Flow Table Value Amount Present Value Par (maturity) value Interest (annuity) Price of bonds 08885 S 510,000 3.71715 17.850 519.485 < Prev 5 of 5 Next >

only need help with this one (required 4). unsure about the value for n

Answer 1

Ellis issued 5 years bond dated jan 2018 and interest has to calculate half yearly i.e 30 June and 31 Dec. The total number of will 10

In the above question it is asking to calculate remaining cash flow as of 31 Dec 2020

N- It refers to number of term interest will compound.

Total number of term is - 10

2018- number of term is 2

2019- number of term is 2

2020- number of term is 2

2021-number of term is 2

2022- number of term is 2

Total number of term =( 2+2+2+2+2)

= 10

But question is asking to calculate remaining cash flow as of 2020 Question is asking to calculate present value of cash flow of 20121and 2022 i.e balance 4 term.