Question
Quatro Co. issues bonds dated January 1, 2017, with a par value of $870,000. The bonds annual contract rate is 9%, and interest is paid
Quatro Co. issues bonds dated January 1, 2017, with a par value of $870,000. The bonds annual contract rate is 9%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 8%, and the bonds are sold for $892,789.
1. What is the amount of the premium on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
amount repaid: | ||
# of payments # | ||
per value at maturity: | ||
total repaid: | ||
less amount borrowed: | ||
total bond interest expense |
3. Prepare an amortization table for these bonds using the effective interest method to amortize the premium.
semi interest period end
| cash interest paid | bond interest expense | premiuem amortization | unamortized premieum | carrying value |
1/1/2017 | |||||
6/30/2017 | |||||
12/31/2017 | |||||
6/30/2018 | |||||
12/31/2018 | |||||
6/30/2019 | |||||
12/31/2019 |
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