Answered step by step
Verified Expert Solution
Question
1 Approved Answer
On January 1, 2015 Astro World issues $20 million of 6% bonds with interest payable semiannually on June 30 and December 31 each year. Astro
On January 1, 2015 Astro World issues $20 million of 6% bonds with interest payable semiannually on June 30 and December 31 each year. Astro | |||||||||||||
World internds to use the funds to build the world's largest Astro avalance and the "tornado" - a giant outdoor vortex in which riders spin in | |||||||||||||
progressively smaller and faster circles until they drop through a small tunnel at the bottom. | |||||||||||||
1. The bond issue price is $17,864,493 at a time when the market rate is 7%. Please answer the following: | |||||||||||||
a. Is the bond issued at a premium, a discount, or at par amount? | |||||||||||||
b. Prepare the entry on January 1, 2015 to record the issuance of the bond. | |||||||||||||
c. Prepare an amortization schedule to show the amortization over the life of the bond. What is the time to maturity for the bond? | |||||||||||||
(Begin the amorization schedule in column S, row 1) | |||||||||||||
d. Prepare the entry to record the interest payments for June 30, 2020 and December 31, 2020. | |||||||||||||
e. How much is the total amount of premium or discount? | |||||||||||||
f. How much interest did White Astro pay over the life of the bond? | |||||||||||||
g. How much interest expense did White Astro recognize over the life of the bond? | |||||||||||||
h. What is the difference between the cash paid for interest and the interest expense? | |||||||||||||
Is this the same as the premium/discount? | |||||||||||||
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started