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Self-Test Bonds

# Self-Test Bonds - Preparing a Bond Amortization Schedule...

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Calculating the Selling Price of a Bond The following facts relate to a bond that is being issued: Face Amount:. ......................... \$2,000,000 Stated Annual Interest Rate:. .. 9% Term:. ...................................... 10 years Interest Paid:. .......................... Annually A. If the effective annual interest rate is 10% when the bond is issued . What is the selling price of the bond? B. If the effective annual interest rate is 9% when the bond is issued . What is the selling price of the bond? C. If the effective annual interest rate is 8% when the bond is issued . What is the selling price of the bond? Excert from: Present Value of a Single Amount of 1 Table Number of Periods 8% 9% 10% 10 0.46319 0.42241 0.38554 Excert from: Present Value of an Annuity of 1 Table Number of Periods 8% 9% 10% 10 6.71008 6.41766 6.14457

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Unformatted text preview: Preparing a Bond Amortization Schedule and Journal Entries The following facts relate to a bond that was issued: Face Amount:. ................................................ \$1,000,000 Stated Annual Interest Rate:. ......................... 6% Term:. ............................................................. 4 years Interest Paid:. ................................................. Annually Effective annual interest rate when issued. .... 8% The bond sold for. .......................................... \$933,757.46 A. Prepare a Bond Amortization Schedule for the life of the bond. B. Prepare the following general journal entries for: 1 . When the bond is sold. 2. Each year the cash interest payment is made. 3. When the bond matures....
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Self-Test Bonds - Preparing a Bond Amortization Schedule...

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