PowerTap Utilities is planning to issue bonds with a face value of $1,500,000 and a coupon rate of 10 percent. The bonds mature in 10 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 12 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided.)

Required:

1. What was the issue price on January 1 of this year? (Round your final answers to nearest whole dollar amount.)

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.)

Interest expense

June 30

December 31

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

June 30

December 31

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.)

Bonda Payable

June 30

December 31