On October 1, 2014, Dejour Energy Inc. issued a $680,000, 7%, seven-year bond. Interest is to be

Question:

On October 1, 2014, Dejour Energy Inc. issued a $680,000, 7%, seven-year bond. Interest is to be paid annually each October 1.

Required
a. Calculate the issue price of the bond assuming a market interest rate of 8% on the date of the bond issue.
b. Using the effective interest method, prepare an amortization schedule similar to Exhibit 15.10.