On January 1 of this year, Olive Corporation issued bonds. Interest is payable o

Question

On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partielly completed amortization schedule below pertains to the bonds: Date Cash Interest January 1, Year 1 End of Year 1 End of Year 2 End of Year 3 End of Year 4 $48,813 48,630 48,434 3,600 $ 3,417 183 210 3,376 48,000 value: Required information 2.00 points Required 1. Complete the amortization schedule. (Enter all your values in positive. Round your final answers to nearest whole dollar amount.) Date Cash Amortization Balance S48,813 January 1, Year 1 End of Year 1 End of Year 2 End of Year 3 End of Year 4 3,600S 3,417$ 183 48,630 S48,434 210 3.376 $ 48,000

Explanation / Answer

ans 1 Date Cash C interest I Amortization A=C-I Balance (last balance-A) Jan 1 year 1 $48,813 end of Year 1 3600 3417 183 $48,630 end of Year 2 3600 $3,404 196 $48,434 (48630*7%) end of Year 3 3600 $3,390 210 $48,224 (48434*7%) end of Year 4 3600 $3,376 224 $48,000 Total 14400 13587 813 working First we need to calculte coupon rate and market rate Coupon rate=$3600/48000*100 7.50 % Market rate 7.0 % 3417/48813*100 Total premium is =48813-48000 $813 ans 2 Principal Amt $48,000 ans 3 Cash Received $48,813 ans 4 premium $813 Total premium is =48813-48000 $813 ans 5 Cash disbursed per period 3600 Cash disbursed total 14400 ans 6 Coupon rate=$3600/48000*100 7.50 % ANS 7 Market rate 7.0 % 3417/48813*100 ANS 8 Interest exp Year 2 $3,404 Year 3 $3,390 ans 9 Bonds payable Year 2 $48,434 Year 3 $48,224 If any doubt please comment. If satisfied you can rate the answer

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