Exercise 10-2 Straight-Line: Amortization of bond iscount ssues bonds with a par

Question

Exercise 10-2 Straight-Line: Amortization of bond iscount ssues bonds with a par value of $180,000 on January 1. 2015. The honds annual contract ate is d interest is paid semiannually on June 30 and December 31. Thhe bonds mature in three years. he 8%, and p annual market rate at the dale of issuance is 10% , and the bonds are sold for $170,862. 1. What is the amount of the discount on these bonds at issuance? 2. How much total bond 3. Prepare an amortization table like the one in Exhibia 10.7 for these bonds: use the straighi-line method d interest expense will be recognized over the life of these bonds? to amortize the discount xercise 10-3 Bringham Company issues bonds with a par value ot $800,000 on their stated issue date. The bonds m- fi annual inkcrest in semiannual payments. On the issue date, the annual market

Explanation / Answer

1 Answer :- $180,000 - $170,862 = $9,138

2 Answer :-

Calculation of total bond interest expense over life of bonds:

3 Answer :- use of straight line method to amortize the discount for these bonds :-

Amout Repaid:- Amount ($) Amount ($) 6 Semi annual payments of $7200 ($180000 × 4%) $ 7200 Par value at maturity $180000 Total Repaid $187,200 Amount Borrowed $170,862 Total interst recognised over the life of the bonds $ 16338

Related Questions

Navigate

• Browse (All)
• Browse E
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.