In: Accounting
Quatro Co. issues bonds dated January 1, 2017, with a par value
of $850,000. The bonds’ annual contract rate is 12%, and interest
is paid semiannually on June 30 and December 31. The bonds mature
in three years. The annual market rate at the date of issuance is
10%, and the bonds are sold for $893,131.
1. What is the amount of the premium on these
bonds at issuance?
2. How much total bond interest expense will be
recognized over the life of these bonds?
3. Prepare an amortization table for these bonds
using the effective interest method to amortize the premium.
Complete this question by entering your answers in the tabs
below.
What is the amount of the premium on these bonds at issuance?
Premium | $ |
How much total bond interest expense will be recognized over the life of these bonds?
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Prepare an amortization table for these bonds using the effective interest method to amortize the premium. (Round all amounts to the nearest whole dollar.)
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