1. On January 1, 2018, Piper Co. issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:

Present value of 1 for 10 periods at 10% ................................... .386

Present value of 1 for 10 periods at 12% ................................... .322

Present value of 1 for 20 periods at 5% ..................................... .377

Present value of 1 for 20 periods at 6% ..................................... .312

Present value of annuity for 10 periods at 10% ......................... 6.145

Present value of annuity for 10 periods at 12% ......................... 5.650

Present value of annuity for 20 periods at 5% ........................... 12.462

Present value of annuity for 20 periods at 6% ........................... 11.470

Instructions

- Calculate the issue price of the bonds.

b. AGMUS Company, Inc. issued $15,000,000 of 8% debentures on May 1, 2017 and received cash

totaling $13,803,924. The bonds pay interest semiannually on May 1 and November 1. The maturity

date on these bonds is November 1, 2025. The firm uses the effective-interest method of amortizing

discounts and premiums. The bonds were sold to yield an effective-interest rate of 10%.

Instructions

• Calculate the total dollar amount of discount or premium amortization during the first year (5/1/17 through 4/30/18) these bonds were outstanding. (Show computations and round to the nearest dollar.)