A. Grove Corporation issued Dh 720,000 of 8% bonds on October 1, 2016, due on October 1, 2021. The interest is to be paid twice a year on April 1 and October 1. The bonds were sold to yield 10% effective annual interest. Grove Corporation closes its books annually on December 31.

Instructions

Complete the following amortization schedule for the dates indicated. (Round all answers to the nearest dollar.) Use the effective-interest method.

		DebitCredit
	Credit Cash	Interest Expense	Bond Discount	Carrying amount of bonds
October 1 2016
April 1 2017
October 1 2017

B.Amsterdam Antiques reported the following comparative income figures in 2018

	2018	2017
Net sales	Dh 630,900	Dh 581,400
other income	9000	7200
	639900	588600
Costs and expenses:
cost of goods sold	424800	367200
selling and general expenses	158400	140400
interest	25200	19800
	608400	526500
income before income taxes and discontinued operations	31500	61200
income taxes	(13500)	(27000)
income before discontinued operations	18000	34200
loss from discontinued operations		(16200)
Net income	18000	18000

Your boss, the president of Amsterdam bank, is concerned about Amsterdam's borrowing capacity. A

representative of Amsterdam Antiques feels that there should be no problem, since net income are the

same with slightly higher sales.

Required:

Compute times interest earned and comment on the bank's position