60 Sun 11:0 BONDS-Project #1-20 18(1).3.docx Q Search ir Normal . ?Spacy Heading

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60 Sun 11:0 BONDS-Project #1-20 18(1).3.docx Q Search ir Normal . ?Spacy Heading 1 Text Box Sha Excel file as an attachment to the link provided in the classroom. BU Cumculun Corporation issued SOO,000 of 7% bonds on September l, 2017, due September I, 2022. The interest is to be paid twice a year on March 1 and September 1. The bonds were sold toyield 9% effective annual interest BUOmoulun closes its books annually on December 31 (a) Complese an amortization schedule for the above bond (for all periods) in a similar format as below. (Round all answers to the nearest dollar.) Interest method. Use the effective- Date Debit Cash Interest Bond Discount Amount of Expense Bonds Sep. 1, 2017 Use the Pw formula in Excel see posted bond March 1, 2018 chedule (use Fxcel) (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 I, 2018 entry 4. September 1, 2018 entry 5. Adjusting entry from December 31, 2018 (e) 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-lime amortization method (entries are not required). ayout 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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