Serial Bonds (SHOW ALL CALCULATIONS AND WORK)
Mitchell Company issued 6,000,000 worth of serial bonds on March 1, 2017. These 7% bonds were sold in a 7.1% market and pay interest each Feb 28th. The serial bonds have the following maturity schedule.
Maturity date | Amount maturing | ||||
February 28, 2019 | 0 | ||||
February 28 2020 | 1,000,000 | ||||
February 28, 2022 | 1,000,000 | ||||
February 28, 2024 | 1,500,000 | ||||
February 28, 2025 | 2,500,000 | ||||
Total | 6,000,000 | ||||
Below prepare the cash flows relating to this bond | |||||
Maturity date | Amount maturing | Interest to be paid | Total Cash Paid Out | ||
February 28, 2018 | |||||
February 28, 2019 | |||||
February 28 2020 | |||||
February 28 2021 | |||||
February 28, 2022 | |||||
February 28, 2023 | |||||
February 28, 2024 | |||||
February 28, 2025 | |||||
Assuming the bonds sold for $5,970,364.83 complete the following amortization table. | |||||
Date | Principal | Cash Interest | Interest Expense | Amortization | Carrying Value |
3/1/2017 | |||||
Cash flows relating to this bond | |||
Maturity date | Amount maturing | Interest to be paid | Total Cash Paid Out |
28-Feb-18 | 0 | 0 | 0 |
28-Feb-19 | 0 | 0 | 0 |
February 28 2020 | 1,000,000 | 70000 | 1070000 |
February 28 2021 | 0 | 0 | |
28-Feb-22 | 1,000,000 | 70000 | 1070000 |
28-Feb-23 | 0 | 0 | 0 |
28-Feb-24 | 1,500,000 | 105000 | 1605000 |
28-Feb-25 | 2,500,000 | 175000 | 2675000 |
Total | 6,000,000 | 420,000 | 6,420,000 |
Amortization Table | |||||
Date | Principal | Cash Interest | Interest Expense 7.1% | Amortization | Carrying Value |
3/1/2017 | 6,000,000 | 0 | 426000 | 29,635 | 5,970,365 |
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