Christmas Anytime issues $740,000 of 6% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when:
1. The market interest rate is 5% and the bonds issue at a premium
|Date||Cash Paid||Interest Expense||Change in Carrying Value||Carrying Value|
When the market interest rate is lower than the coupon rate, bonds will be issued at a discount.
= [$740,000 x 3% x PVIFA (2.5%, 30)] + [$740,000 x PVIF (2.5%, 30)]
= ($22,200 x 20.93) + ($740,000 x 0.477)
The required amortization table will be prepared as follows:
|Date||Cash Paid||Interest Expense||Change in carrying value||Carrying value|
Get Answers For Free
Most questions answered within 1 hours.