In this assignment you will be working with bonds. You will compute bond issue price, then make an amortization table. You will then do a few select journal entries using your amortization table.

Here is the data:

• Bond issue principal amount: 800,000
• Semi-annual interest payments at the end of every six months
• Term = 6 years
• Stated rate = 6%
• Interest payment = ?

Scenarios:

1. Market rate = 4%
2. Market rate = 6%
3. Market rate = 8%

Requirements:

For each of the three scenarios, complete a separate tab in Excel. Include the data for your problem in each sheet. Then:

1. Compute the interest payment. It is the same amount in each scenario.
2. Compute bond issue price
3. Create an amortization table using the effective interest method for all 12 payment periods.
4. Below your Effective Interest amortization table show journal entries for:
   1. Bond Issue
   2. First payment (payment at end of period 1)
   3. Payment at the end of the 6^th period.
   4. Settlement of the bond after last payment. Note: do not include the final payment journal entry; only include the entry for the settlement of bon
5. For the instances that have a discount or a premium (scenarios 1 and 3) do the following:
   1. Below your journal entries, create an amortization table using the same bond issue price as you did in step 2 above. Use the straight-line method of amortization for this second table (see chapter 14 appendix).
6. Below your straight-line amortization table show journal entries for:
   1. First payment (payment at end of period 1)
   2. Payment at the end of the 6^th period.