Refer to the bond details in Exercise 14-4 and prepare an amortization table like the one in Exhibit 14B.2
for these bonds using the effective interest method to amortize the premium.
REFER 14-4
Dell Co. issues bonds dated January 1, 2009, with a par value of $450,000. The bonds’ annual contract
rate is 9%, 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 $461,795.
1. What is the amount of the premium 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 like the one in Exhibit 14.11 for these bonds; use the straight-line
method to amortize the premium.
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