Issued 15 year, $80,000 face value, 4.5% bonds on July 1 at 103. The bonds were...

Issued 15 year, $80,000 face value, 4.5% bonds on July 1 at 103. The bonds were sold to yield an effective annual rate of 4.227885%, and they pay interest every Jan 1 and Jul 1. Accrue bond interest payable and amortize bond discount/premium. Jumukha Corp. uses effective-interest amortization. (Hint: the bond was issued midway through year.)

Expert Solution

Coupon Payment number	Coupon Payment date	Beginning Value of bond(1)	Interest Expense(2)=(1)4.227885%6/12	Cash interest paid(3)=800004.5%6/12	Premium amortization(4)=(3)-(2)	Unamortized premium	Ending Value of bond
0	July 1					$ 2,400.00	$ 82,400.00
1	Jan 1	82,400.00	1,741.89	1,800.00	58.11	2,341.89	82,341.89
2	July 1	82,341.89	1,740.66	1,800.00	59.34	2,282.55	82,282.55
3	Jan 1	82,282.55	1,739.41	1,800.00	60.59	2,221.95	82,221.95
4	July 1	82,221.95	1,738.12	1,800.00	61.88	2,160.08	82,160.08
5	Jan 1	82,160.08	1,736.82	1,800.00	63.18	2,096.90	82,096.90
6	July 1	82,096.90	1,735.48	1,800.00	64.52	2,032.38	82,032.38
7	Jan 1	82,032.38	1,734.12	1,800.00	65.88	1,966.49	81,966.49
8	July 1	81,966.49	1,732.72	1,800.00	67.28	1,899.22	81,899.22
9	Jan 1	81,899.22	1,731.30	1,800.00	68.70	1,830.52	81,830.52
10	July 1	81,830.52	1,729.85	1,800.00	70.15	1,760.37	81,760.37
11	Jan 1	81,760.37	1,728.37	1,800.00	71.63	1,688.74	81,688.74
12	July 1	81,688.74	1,726.85	1,800.00	73.15	1,615.59	81,615.59
13	Jan 1	81,615.59	1,725.31	1,800.00	74.69	1,540.90	81,540.90
14	July 1	81,540.90	1,723.73	1,800.00	76.27	1,464.63	81,464.63
15	Jan 1	81,464.63	1,722.12	1,800.00	77.88	1,386.74	81,386.74
16	July 1	81,386.74	1,720.47	1,800.00	79.53	1,307.21	81,307.21
17	Jan 1	81,307.21	1,718.79	1,800.00	81.21	1,226.00	81,226.00
18	July 1	81,226.00	1,717.07	1,800.00	82.93	1,143.07	81,143.07
19	Jan 1	81,143.07	1,715.32	1,800.00	84.68	1,058.39	81,058.39
20	July 1	81,058.39	1,713.53	1,800.00	86.47	971.91	80,971.91
21	Jan 1	80,971.91	1,711.70	1,800.00	88.30	883.61	80,883.61
22	July 1	80,883.61	1,709.83	1,800.00	90.17	793.45	80,793.45
23	Jan 1	80,793.45	1,707.93	1,800.00	92.07	701.37	80,701.37
24	July 1	80,701.37	1,705.98	1,800.00	94.02	607.36	80,607.36
25	Jan 1	80,607.36	1,703.99	1,800.00	96.01	511.35	80,511.35
26	July 1	80,511.35	1,701.96	1,800.00	98.04	413.31	80,413.31
27	Jan 1	80,413.31	1,699.89	1,800.00	100.11	313.20	80,313.20
28	July 1	80,313.20	1,697.77	1,800.00	102.23	210.98	80,210.98
29	Jan 1	80,210.98	1,695.61	1,800.00	104.39	106.59	80,106.59
30	July 1	$ 80,106.59	$ 1,693.41	$ 1,800.00	$ 106.59	$ -0.00	$ 80,000.00

Total

Working:

# 1	Issued proceeds from bonds			=	Face Value * % of issuance
				=	$ 80,000	*	103%
				=	$ 82,400

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