Quatro Co. issues bonds dated January 1, 2019, with a par value
of $830,000. The bonds’ annual contract rate is 9%, and interest is
paid semiannually on June 30 and December 31. The bonds mature in
three years. The annual market rate at the date of issuance is 8%,
and the bonds are sold for $851,741.
1. What is the amount of the premium on these bonds at issuance?
2. How much total bond interest expense will be recognized over the life of these bonds?
3. Prepare an effective interest amortization table for these bonds.
Prepare an effective interest amortization table for these bonds. (Round all amounts to the nearest whole dollar.)
|Total bond interest expense over life of bonds:|
|6 payments of $37350||224100|
|Par value at maturity||830000|
|Less amount borrowed||851741|
|Total bond interest expense||202359|
|Semiannual Interest PeriodEnd||Cash Interest Paid||Bond Interest Expense||Premium Amortization||Unamortized Premium||Carrying Value|
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