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On January 3, 2007, the company issued 20-year bonds with a face value of $300,000. The bonds carry a coupon rate of 8% and the
On January 3, 2007, the company issued 20-year bonds with a face value of $300,000.
The bonds carry a coupon rate of 8% and the market rate for bonds issued by other companies with similar risk was 6%.
Interest on the bonds is paid twice per year on July 1st and Jan 1st.
A. Calculate the price of the bond using the present or future value tables provided.
B. Using the effective interest method, make a table to cover interest payments through to the end
C. Journalize the bond issue and the interest payment for July 1, 2009.
EFFECTIVE INTEREST AMORTIZATION TABLE | ||||||||||
Interest Payment No. | Amount of Interest Paid | Interest Expense | Discount or Premium Amortization | Unamortized Discount or Premium | Carrying Value of Bond | |||||
1 | ||||||||||
2 | ||||||||||
3 | ||||||||||
4 | ||||||||||
5 | ||||||||||
6 | ||||||||||
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