Q3: On January 1. 2011. Company A issues long-terms bonds which are due on January l,

2016. Interest is paid semiannually

on Janua

ry I and July 1 each year. Face amount of bonds

is $500.000 with stated interest rate (coupon rate) of 10%. At the time of issuance, market

interest rate is 12%.

The price of bonds is $463.202,

and bonds will be sold at $36.798 discount from the face

amount of $500,000.

Instruction:

Construct a bond amortization table for this problem to indicate the amount of interest

expense and discount amortization using effective interest method. Make sure all columns

and rows are properly labeled. (Round to the nearest dollar.) (Marks 8)