Question
Question 3: On January 1, 2023, Manson Corporation issued $3-million 10-year bonds. The bonds pay semi-annual interest on July 1 and January 1, and Manson
Question 3:
On January 1, 2023, Manson Corporation issued $3-million 10-year bonds. The bonds pay semi-annual interest on July 1 and January 1, and Manson has a December 31, year-end. Presented below is a partial amortization table:
Semi Annual Interest Period | Interest payment | Interest expense | Amortization | Bond Amortized Cost |
Jan 1, 2023 |
|
|
| [1] |
July 1, 2023 | $75,000 | [2] | $10,095 | 3,235,177 |
Jan 1, 2024 | [3] | 64,704 | 10,296 | 3,224,881 |
July 1, 2024 | 75,000 | 64,498 | 10,502 | 3,214,379 |
Jan 1, 2025 | 75,000 | 64,288 | [4] | [5] |
July 1, 2025 | 75,000 | 64,073 | 10,927 | 3,192,740 |
Jan 1, 2026 | 75,000 | 63,855 | 11,145 | 3,181,595 |
Required:
Set up a table in MS Excel with all relevant information. Use the table to answer the following questions in MS Excel. Use Excel formulas to support your calculation whenever possible
- Were the bonds issued at a discount or premium? How do you know?
- What is the face value of the bonds?
- What is the contractual rate of interest?
- Calculate the missing amounts for items [1] through [5] in the amortization table
- What was the market interest rate when the bonds were issued?
- Prepare the journal entry to record the issue the bonds on January 1, 2023
- Prepare the journal entry to record the first interest payment on July 1, 2023
- Prepare the journal entry to record the accrual of interest on December 31, 2023
- What amounts would be reported as current and as noncurrent liabilities on Mansons December 31, 2023 balance sheet?
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