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.

Explanation / Answer

A) SEMI ANNUALLY INTEREST 19600 (560000*7%*6/12) PV Annuity factor i=5%, n = 24 13.79864 Pv of interest payments 270453 Bonds payable at end 560000 PV $1 i=5% . N = 24 0.31007 Pv value of bond payments 173639 Issue piece of bond 444093 (270453+173639) B) PERIOD ENDING NET BV OF BOND PAYABLE INTREST EXPENSE AMOUNT OF PAYMENT DISCOUNT AMMORTIZE NET BOOK VALUE 31/3/16 444093 22204.65 19600 2604.65 446697.65 30/9/16 446697.65 22334.88 19600 2734.88 449432.53 31/3/17 449432.53 22471.63 19600 2871.63 452304.16

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