Home REV Insert Draw Data Formulas Page Layout C v 11 ab Wrap ~ A Calibri (Body) B IV. Paste v ov Merge Open recovered workbooks? Your recent changes were saved. Do you want to continue working where M12 D G H 1 Straight Line vs Effective Interest Amortization Methods 2 Ranger Co. Issues bonds dated January 1, information about the bonds is below. Interest is paid semiannually on June 30 and December 31. Par 850,000 Rate 12% Term 3 Market Rate 10% Issue Price 893,131 9 Semi annual interest 51,000 10 11 1. What is the amount of the premium on these bonds at issuance? 12 13 Issue Price 14 Par 15 premium 16 premium amoritized per period + 17 2. How much total bond interest expense will be recognized over the life of these bonds? Total Bond Interest Expense Over Life of Bonds: 18 19 Amount repaid 20 payments of 21 Par value at maturity 22 Total repaid 23 Less amount borrowed 24 Total bond interest expense 25 26 3. Prepare a straight-line amortization table for these bonds. 27 Semiannual Interest Period- Unamortized 28 Carrying Value End Premium 29 1/1 yr 1 30 31 1/1 yr 2 Ru Problem 5 6/30 yr 1 27 Select destination and press ENTER or choose Paste Home Insert Insert Draw Page Layout Formulas Data Review View Tell me Calibri (Body) V 11 A Wrap Text Paste Ilili BIU HI Merge & Center Open recovered workbooks? Your recent changes were saved. Do you want to continue working where you left off? M12 I 22 To read 23 Less amount borrowed 24 Total bond interest expense 25 26 3. Prepare a straight-line amortization table for these bonds 27 Semiannual Unamortized Interest Period Premium Carrying Value 28 End 30 31 32 1 6/30 yr 1 1/1 yr 2 6/30 yr 2 1/1/ yr 3 6/30 yr 3 12/31 y 3 + 34 35 37 38 39 40 Unamorized Premium Carrying Value 42 3. Prepare an effective interest: amortization of these bonds Semiannual Cash Interest Bond Interest Interest Premium Paid Expense Amorization 43 Period-End 1/1 yr 1 45 6/30 yr 1 46 1/1 yr 2 47 6/30 yr 2 1/1/ yr 3 49 6/30 y 3 SO 12/31 yr 3 51 Total 52 53 54 55 Problem 5 Select destination and press ENTER or choose Paste MacE