LLS6e_Ch10 - Student Name: Class: Problem 10-08 DEKTRONIK...

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Student Name: Class: Problem 10-08 DEKTRONIK CORPORATION Requirement 1: Bond Issue Price Principal: Interest: Bond issue price Why are both stated and effective-interest rates used? Requirement 2: Straight-line Amortization 2009 2010 2011 2012 2013 Cash interest payment Amortization of discount Bond interest expense Effective interest rate Explanation of theoretical deficiency:
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Student Name: Class: Problem 10-08 Requirement 3: Bond Payment Schedule Cash Interest Amortization Net Date Payment Expense of Discount Liability 1/1/2009 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 *Note: The rounding function is not used in these calculations, but $35 must be added into the formula used for year 2013 interest to make up for rounding errors. Explanation of constant interest rate: Requirement 4: Which amortization method should be used? Which method is preferred? Why?
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Given Data P10-08: DEKTRONIK CORPORATION Maturity (par) value $800,000 Interest rate 8% Maturity date Dec. 31, 2013 Effective-interest rate when sold: 12%
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This note was uploaded on 01/31/2010 for the course ACCOUNTING 30516 taught by Professor Whoever during the Spring '09 term at American Academy of Art.

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LLS6e_Ch10 - Student Name: Class: Problem 10-08 DEKTRONIK...

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