Apollo Corporation issued $560,000 of 7%, 12-year bonds payable on March 31, 201

Question

Apollo Corporation issued $560,000 of 7%, 12-year bonds payable on March 31, 2016. The market interest rate at the date of issuance was 10%, and the Apollo Corporation bonds pay interest semiannually. Apollo Corporation's year-end is March 31.

Calculate the issue price of the bonds using the PV function in Microsoft® Excel®.

Prepare an effective-interest amortization table for the bonds through the first three interest payments. Round amounts to the nearest dollar.

Record Apollo Corporation's issuance of the bonds on March 31, 2016, and payment of the first semiannual interest amount and amortization of the bond discount on September 30, 2016.

Note. Explanations are not required.

Show all calculations for your solution. * I need help on calculations* Can you direct me?

Explanation / Answer

Semiannual Interest : 560000 *.07 *6/12 = 19600

semiannual months : 12* 2 = 24

semiannual yield : 10*6/12 = 5%

Issue Price : [PVA 5%,24*interest ]+[PVF 5%,24*face value]

       =[13.79864*19600]   +[.31007*560000]

        =270453.34+ 173639.2

             = $ 444093 rounded

2)

3)

**Find present value factor and annuity factor from there table respectively at 5% or using the financial calculator

Period Interest expense iNTEREST paid Discount amortised carrying value at end 31/3/2016 444093 30/9/2016 22205   [444093*.10*6/12] 19600 2605 446698   [444093+2605] 31/3/2017 22335   [446698*.10*6/12] 19600 2735 449433    [446698+2735] 30/9/2017 22472     [449433*.10*6/12] 19600 2872 452305

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