Question

On January 1,

2016,

Brand

Company purchased bonds with a maturity value of

$40,000

for

$34,866.

These bonds have a

14%

per year coupon rate payable semi-annually on June 30 and December 31. The bond matures on December 31,

2020.

On January 1,

2016,

the market yield for bonds of equivalent risk and maturity was

18%

per year.

Required

Prepare an amortization schedule that shows the amortized cost of this bond at the end of each of the five years and the amount of interest income for each of those five years.

Complete the table below. (Round all amounts to the nearest whole dollar.)

	Beginning		Interest		Coupon		Ending
	amortized cost	+	income	-	payment	=	amortized cost
Year 1 - Jun 30
Year 1 - Dec 31

Year 2 - Jun 30
Year 2 - Dec 31

Year 3 - Jun 30
Year 3 - Dec 31

Year 4 - Jun 30
Year 4 - Dec 31

Year 5 - Jun 30
Year 5 - Dec 31