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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

  1. Were the bonds issued at a discount or premium? How do you know?
  2. What is the face value of the bonds?
  3. What is the contractual rate of interest?
  4. Calculate the missing amounts for items [1] through [5] in the amortization table
  5. What was the market interest rate when the bonds were issued?
  6. Prepare the journal entry to record the issue the bonds on January 1, 2023
  7. Prepare the journal entry to record the first interest payment on July 1, 2023
  8. Prepare the journal entry to record the accrual of interest on December 31, 2023
  9. What amounts would be reported as current and as noncurrent liabilities on Mansons December 31, 2023 balance sheet?

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