ndow Ei BONDS-Project #1-2018(1)-3.docx O D Searc Heading 1 Text Box Excel file

Question

ndow Ei BONDS-Project #1-2018(1)-3.docx O D Searc Heading 1 Text Box Excel file as an attachment to the link provided in the classroom interest and discount amortization. BU Cumculum Corporation issued S900,000 of 7% bonds on September i, 2017, due on September 1, 2022 The interest is to be paid twice a year on March 1 and 1. The bonds were sold to yield 9% effective annual interest. Bu curriculum closes its books annually on December 31. Instructions )Complete an amortization schedule for the above bond (for all pariods) in a simailar format as below. (Round all answers to the nearest dollar.) Use the effeetive Interest method. Debin Credit Credit Cash Interest Bond DiscountAmount of Bonds Use the PV fomula in Excel ee posted bond excel sheet in the Sep. 1, 2017 March 1, 2018 schedule (use (b) Prepare the journal entries for the following: 1. September 1, 2017 bond issue 2. Adjusting entry for December 31, 2017 (adjusting entry should cover 4 months) 3. March 1, 2018 entry 4. September 1, 2018 entry 5. Adjusting entry from December 31, 2018 (c) Compute the interest expense to be reported in the income statement for the year ended December 31, 2017 and December 31, 2018. (d)Complete an amortization schedule for the above bond (for all periods) using the straight-line amortization method (entries are not required) ut View

Explanation / Answer

a. First of all Bond issue Price is calculated:

Now the amortization table is as prepared below:

b. Journal entries are as prepared below:

c. Interest expense to be reported in 2017 is :

2017 ?$24,864

2018 $75,207

d. Amortization table using SLM is:

n=10 i=4.5% Cash Flow Table Value Amount Present Value Par (maturity value) 0.64393 900,000 579,535 Interest (annuity) 7.91272 31,500 249,251 828,786 PV factor 1 0.957 2 0.916 3 0.876 4 0.839 5 0.802 6 0.768 7 0.735 8 0.703 9 0.673 10 0.644 7.913

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