Question

# Novak Company sells 8% bonds having a maturity value of \$3,170,000 for \$2,929,660. The bonds are...

Novak Company sells 8% bonds having a maturity value of \$3,170,000 for \$2,929,660. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1.

Determine the effective-interest rate. (Round answer to 0 decimal places, e.g. 18%.)

 The effective-interest rate %

Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 38,548.)

 Schedule of Discount Amortization Effective-Interest Method Year Interest Payable Interest Expense Discount Amortized Carrying Amount of Bonds Jan. 1, 2020 \$ \$ \$ \$ Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2024 Effective rate is calculated in excel by using formula = Rate(nper,pmt,pv,fv,0)

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