!!HIGHLIGHTED AREAS ONLY!!

!!HIGHLIGHTED AREAS ONLY!!

Quatro Co. issues bonds dated January 1, 2015, with a par value of $860,000. The bonds annual contract rate is 10%, 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 $905,068.

1.

What is the amount of the premium on these bonds at issuance?

Premium

$

2.	How much total bond interest expense will be recognized over the life of these bonds?

Total bond interest expense over life of bonds:
Amount repaid:
	payments of	$	$
Par value at maturity
Total repaid
Less amount borrowed
Total bond interest expense			$

3.	Prepare an amortization table for these bonds; use the straight-line method to amortize the premium. (Round your intermediate calculations to the nearest dollar amount.)

Semiannual Period-End	Unamortized Premium	Carrying Value
01/01/2015
06/30/2015
12/31/2015
06/30/2016
12/31/2016
06/30/2017		0
12/31/2017

Quatro Co. issues bonds dated January 1 2015. with a par value of $860.000. The bonds' annual contract rate is 10%, 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 $905.068. 1. What is the amount of the premium on these bonds at issuance remium 2. How much total bond interest expense will be recognized over the life of these bonds? Total bond interest expense over life of bonds: Amount repaid payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense 3. Prepare an amortization table for these bonds use the straight-line method to amortize the premium. (Round your intermediate calculations to the nearest dollar amount.) Semiannual Period-End Unamortized Premium Carrying Value 01/01/2015 06/30/2015 12/31/2015 06/30/2016 12/31/2016 0 06/30/2017 12/31/2017