Question
PowerTap Utilities is planning to issue bonds with a face value of $1,800,000 and a coupon rate of 7 percent. The bonds mature in 15
PowerTap Utilities is planning to issue bonds with a face value of $1,800,000 and a coupon rate of 7 percent. The bonds mature in 15 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.
1. What was the issue price on January 1 of this year?
2. What is the book value of the bonds on June 30 and December 31 of this year?
Bonds Payable June 30:
Bonds Payable December 31:
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
5th Canadian edition
978-1118024492
