Cornerstone Exercise 9-35 (Algorithmic) Bonds Issued at a Premium (Effective Interest) Cookie Dough Corporation issued $1,450,000...

Cornerstone Exercise 9-35 (Algorithmic)
Bonds Issued at a Premium (Effective Interest)

Cookie Dough Corporation issued $1,450,000 in 6%, 10-year bonds (payable on December 31, 2030) on January 1, 2021, for $1,595,000. Interest is paid on June 30 and December 31. The market rate of interest is 3%.

Required:

Prepare the amortization table through December 31, 2023, using the effective interest rate method. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". If required, round your answers to the nearest whole dollar.

Cookie Dough Corporation
Amortization Table

Period	Cash Payment (Credit)	Interest Expense (Debit)	Premium on Bonds Payable (Debit)	Premium on Bonds Payable Balance	Carrying Value
At issue	$	$	$	$	$
6/30/21
12/31/21
6/30/22
12/31/22
6/30/23
12/31/23

Solutions

Expert Solution

Face Value of Bonds = $1,450,000
Issue Value of Bonds = $1,595,000

Premium on Bonds = Issue Value of Bonds - Face Value of Bonds
Premium on Bonds = $1,595,000 - $1,450,000
Premium on Bonds = $145,000

Annual Coupon Rate = 6.00%
Semiannual Coupon Rate = 3.00%
Semiannual Coupon = 3.00% * $1,450,000
Semiannual Coupon = $43,500

Annual Interest Rate = 3.00%
Semiannual Interest Rate = 1.50%

ekkarill92 answered 1 year ago

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