Question
On January 1, 2021, Sheridan Co. issued ten-year bonds with a face value of $4,500,000 and a stated interest rate of 10%, payable semiannually on
On January 1, 2021, Sheridan Co. issued ten-year bonds with a face value of $4,500,000 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% | 0.386 | ||
Present value of 1 for 10 periods at 12% | 0.322 | ||
Present value of 1 for 20 periods at 5% | 0.377 | ||
Present value of 1 for 20 periods at 6% | 0.312 | ||
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 |
(a)
Your answer has been saved. See score details after the due date.
Calculate the issue price of the bonds.
Issue price of bond | $ |
Attempts: 1 of 1 used
(b)
Without prejudice to your solution in part (a), assume that the issue price was $3,978,000. Prepare the amortization table for 2021, assuming that amortization is recorded on interest payment dates using the effective-interest method.
Date | Cash | Expense | Amortization | Carrying Amount |
1/1/18 | $ | |||
6/30/18 | $ | $ | ||
12/31/18 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started