The notes to the Alliance Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year):
| Note 6. Indebtedness | |
| Bonds payable, 3% due on December 31, Year 8. . . . | $2,000,000 | |
| Less: Discount. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | ? | ? |
| Notes payable, 7%, payable in $50,000 annual | | |
| installments starting in Year 5. . . . . . . . . . . . . | | 300,000 |
0 Requirements Data Table $2,000,000 Assume the market interest rate is 7% on January 1 of year 1, the date the bonds are issued. a. Using the PV function in Excel", what is the issue price of the bonds? b. What is the maturity value of the bonds? c. What is Alliance's annual cash interest payment on the bonds? d. What is the carrying amount of the bonds at December 31, year 1? 2. Prepare an amortization table through December 31, Year 4 for the bonds. How much is Alliance's interest expense on the bonds for the year ended December 31, Year 4? 3. Show how Alliance would report these bonds and notes payable at December 31, Year 4. Note 6. Indebtedness Bonds payable, 3% due on December 31, Year 8 ... Less: Discount... Notes payable, 7%, payable in $50,000 annual installments starting in Year 5 300,000 Print Done nint un The notes to the Alliance Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): (Click the icon to view the financial statement data.) Alliance amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31. Read the requirements. Requirement 1. Assume the market interest rate is 7% on January 1 of year 1, the date the bonds are issued. (Round your answers to the nearest whole dollar.) a. Using the PV function in Excel, what is the issue price of the bonds? The issue price of the bonds is $ b. What is the maturity value of the bonds? The maturity value of the bonds is $ c. What is Alliance's annual cash interest payment on the bonds? The annual cash interest payment is $ d. What is the carrying amount of the bonds at December 31, year 1? The carrying amount of the bonds at December 31, Year 1 is $ The notes to the Alliance Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Click the icon to view the financial statement data.) Alliance amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31. Read the requirements. Requirement 2. Prepare an amortization table through December 31, Year 4 for the bonds. How much is Alliance's interest expense on the bonds for the year ended December 31, Year 4? Begin by preparing the amortization table through December 31, Year 4 for the bonds. (Round your answer to the nearest whole dollar.) Alliance Ltd. Amortization Table Interest Discount Expense Amortization Annual Interest Discount Account Balance Bond Carrying Amount Interest Date Payment Jan 1, Yr 1 Dec 31, Yr 1 Dec 31, Yr 2 Dec 31, Yr 3 Dec 31. Yr 4 The notes to the Alliance Ltd. financial statements reported the following data on December 31, Year 1 (end of the fiscal year): Click the icon to view the financial statement data.) Alliance amortizes bond discounts using the effective-interest method and pays all interest amounts at December 31. Read the requirements. How much is Alliance's interest expense on the bonds for the year ended December 31, Year 4? $ L Requirement 3. Show how Alliance would report these bonds and notes payable at December 31, Year 4. Liabilities Less: Total long-term liabilities Total liabilities
