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Home / Questions / On January 1, 2015 Ripstick Park issues $800,000 of 8% bonds due in ten years with interes...

On January 1, 2015 Ripstick Park issues $800,000 of 8% bonds due in ten years with interest payable semiannually on June 30 and December 31 each year

On January 1, 2015, Ripstick Park issues $800,000 of 8% bonds, due in ten years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 7%, the bonds will issue at $856,850.

  1. Complete the first three rows of an amortization table through December 31, 2015.

2.   Record the bond issue on January 1, 2015, and the first two semi-annual interest payments on June 30, 2015, and December 31, 2015.

 

 

147. Sun City issues $50 million of bonds on January 1, 2015 that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:

 

(1)

 

Date

(2)

Cash

Paid

(3)

Interest

Expense

(4)

Decrease in

Carrying Value

(5)

Carrying

Value

1/1/2015

 

 

 

$55,338,768

6/30/2015

2,000,000

1,936,857

63,143

55,275,625

12/31/2015

2,000,000

1,934,647

65,353

55,210,272

 

Required:

1. Were the bonds issued at face amount, a discount, or a premium?

2. What is the original issue price of the bonds?
3. What is the face amount of the bonds?
4. What is the stated annual interest rate? (Hint: Be sure to provide the annual rate rather than the

six month rate.)
5. What is the market annual interest rate? (Hint: Be sure to provide the annual rate rather than

 the six month rate.)

6. What is the total cash paid for interest assuming the bonds mature in 20 years?

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