Question

On January 1, 2021, Universe of Fun issues $700,000, 7% bonds that mature in 10 years. The market interest rate for bonds of similar risk and maturity is 8%, and the bonds issue for $652,434. Interest is paid semiannually on June 30 and December 31. eBook Print References Required: 1. Complete the first three rows of an amortization schedule. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Date Cash Paid Interest Expense Change in Carrying Value Carrying Value $ 652,434 1/1/2021 6/30/2021 12/31/2021

Answer 1

Solution

Year end	Cash paid	Interest expense	Change in carrying value	Carrying value
..1/1/2021				$             652,434
..6/30/2021	$        24,500	$        26,097*	$            1,597	$             654,031
..12/31/2021	$        24,500	$        26,161**	$            1,661	$             655,693

*652434 x 4%

**654031 x 4%