PowerTap Utilities is planning to issue bonds with a face value of $1,400,000 and a coupon rate of 6 percent. The bonds mature in 9 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. PowerTap uses the effective-interest amortization method. Assume an annual market rate of interest of 8 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

1.

Required information

Required:

1. What was the issue price on January 1 of this year? (Round your final answer to whole dollars.)

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 10-04 Report bonds payable and interest expense for bond securities issued at a discount.

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2.

Required information

2. What amount of interest expense should be recorded on June 30 and December 31 of this year? (Round your final answers to nearest whole dollar amount.)

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 10-04 Report bonds payable and interest expense for bond securities issued at a discount.

Check my work

3.

Required information

3. What amount of cash should be paid to investors June 30 and December 31 of this year?

References

eBook & Resources

WorksheetDifficulty: 2 MediumLearning Objective: 10-04 Report bonds payable and interest expense for bond securities issued at a discount.

Check my work

4.

Required information

4. What is the book value of the bonds on June 30 and December 31 of this year? (Round your final answers to nearest whole dollar amount.)