Requirements Assume the market interest rate on January 1 of year 1, the date of
ID: 2566817 • Letter: R
Question
Requirements Assume the market interest rate on January 1 of year 1, the date of issuance of the bonds, is 5%. Answer the following questions about Giving Ltd.'s long-term liabilities: 1. a. Using the PV function in Excel , what is the issue price of the bonds? b, what is the maturity value of the 3% bonds? c. What is Giving Ltd.'s annual cash interest payment on the 3% bonds? d. What is the carrying amount of the 3% bonds at December 31, year 1? Prepare an amortization table through December 31, Year 4 for the 3% bonds. (Round all amounts to the nearest dollar) How much is Giving Ltd.'s interest expense on the 3% bonds for the year ended December 31, Year 4? Show how Giving Ltd. would report the 3% bonds payable and the 4% notes payable at December 31, Year 4 2. 3. Print DoneExplanation / Answer
The interest expense for each year is 5% on carrying value of Bonds payable.
The amortization table will be as given below:
Annual Interest date
Interest Payment
Interest Expense
Discount Amortization
Discount account Balance
Bond Carrying Amount
Jan. 1 Yr 1
452425
3047575
Dec.31, Yr 1
105000
152379
47379
405046
3094954
Dec.31, Yr 2
105000
154748
49748
355298
3144702
Dec.31, Yr 3
105000
157235
52235
303063
3196937
Dec.31, Yr 4
105000
159847
54847
248217
3251783
Dec.31, Yr 5
105000
162589
57589
190627
3309373
Dec.31, Yr 6
105000
165469
60469
130159
3369841
Dec.31, Yr 7
105000
168492
63492
66667
3433333
Dec.31, Yr 8
105000
171667
66667
0
3500000
Annual Interest date
Interest Payment
Interest Expense
Discount Amortization
Discount account Balance
Bond Carrying Amount
Jan. 1 Yr 1
452425
3047575
Dec.31, Yr 1
105000
152379
47379
405046
3094954
Dec.31, Yr 2
105000
154748
49748
355298
3144702
Dec.31, Yr 3
105000
157235
52235
303063
3196937
Dec.31, Yr 4
105000
159847
54847
248217
3251783
Dec.31, Yr 5
105000
162589
57589
190627
3309373
Dec.31, Yr 6
105000
165469
60469
130159
3369841
Dec.31, Yr 7
105000
168492
63492
66667
3433333
Dec.31, Yr 8
105000
171667
66667
0
3500000
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