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On January 2, 2020, NSP Corporation issues $1,040,000 of 4 percent bonds at a time when the market rate of interestis 5 percent These bonds mature in five years and pay interest semi-annually E (Click the icon to view the amortization table.) On April 30, 2020, NSP Corporation issues $1,040,000 of five-year, 4 percent bonds that pay interest semi-annually. The bonds are issued when the market interest rate is 3 percent (Click the icon to view the amortization table.) Complete parts (a) and (b). a. Will the periodic amount of interest expense increase or decrease over the life of a bond issued at a discount under the effective-interest amortization method? The periodic amount of interest expense because the carrying amount of the bond toward maturity value b. Will the periodic amount of interest expense increase or decrease for a bond issued at a premium? Assume the effective-interest method of amortizing the premium The periodic amount of interest expense because the carrying amount of the bond toward maturity value This Question: 2 pts 8 of 26 (10 complete) This Test: 100 pts possible * Amortization Table bonds issued January 2, 2020 tis On 5 interest Expense (2.5% of On bo Unamortized Discount Account he Interest Payment (2% of Discount Balance Bond Carrying Preceding Bond Carrying co Amortization (Preceding Amount Semi-annual Interest Period a Maturity Value) Amount) (A-B) D-Current C) the Issue Date $ (1,040,000 -D) $ 994,489 998,551 1.002.715 Thi 1 $ $ s ma 2 24,862 24,964 25,068 25,175 4,062 4,164 4,268 45,511 41.449 37,285 33,017 28,642 24,158 3 20,800 20,800 20,800 20,800 20,800 20,800 20,800 b. efr 4 4,375 Th 5 4,484 25,284 25,396 1,006,983 1,011,358 1,015,842 1.020 438 1025,149 1,029,978 ma 6 19,562 14851 7 25,511 4.596 4.711 4,829 4.949 10,022 DOO 20.800 20,800 25,629 25,749 5,073 1,034 927 Clio Print Done On 0 Amortization Table - bonds issued April 30, 2020 X 1 lis 59 Expense On bol Unamortized Premium Account he (1.5% of Interest Payment (2% of Balance Bond Carrying Preceding Bond Carrying Premium Amortization (Preceding Amount Semi-annual Interest Period Maturity Value) . Amount) (A-B) the Issue Date 1 $ Th $ ma 2 3 b eff 4 5 20,800 20,800 20,800 20,800 20,800 20,800 20,800 20,800 20,800 Th D- Current C) (1,040,000 + D) 47,955 $ 1,087,955 43,474 1,083,474 38,926 1,078,926 34,310 1,074,310 29,625 1,069,625 24,869 1,064,869 20,042 1,060,042 15,143 1,055,143 10.170 1,050,170 5,123 1.045 123 16,319 16,252 16,184 16,115 16,044 15,973 15,901 15,827 15,753 4,481 4,548 4,616 4,685 4,756 4,827 4,899 4,973 5,047 ma 6 7 8 9 Clic Print Done
