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Super Splash issues $830,000, 9% bonds on January 1, 2021, that mature in 20 years. The...

Super Splash issues $830,000, 9% bonds on January 1, 2021, that mature in 20 years. The market interest rate for bonds of similar risk and maturity is 8%, and the bonds issue for $912,140. Interest is paid semiannually on June 30 and December 31. 1.

Complete the first three rows of an amortization schedule.

Date cash paid interest expense change in carrying value carrying value
01/01/2021
06/30/2021
12/31/2021
Business   Accounting   
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Answer #1

Solution

Year end Cash paid Interest expense Change in carrying value Carrying value
01/01/2021.. $      912,140
06/30/2021.. $ 37,350 $ 36,486 $        864 $      911,276
12/31/2021.. $ 37,350 $ 36,451 $        899 $      910,377

Interest expense is @4% of Carrying value before payment of interest.

Interest paid in cash is @4.5% of Face value.

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