Sage Co. is building a new hockey arena at a cost of $2,310,000. It received a d

Question

Sage Co. is building a new hockey arena at a cost of $2,310,000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $1,820,000 to complete the project. It therefore decides to issue $1,820,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 11%.

Prepare a bond amortization schedule up to and including January 1, 2020, using the effective interest method. (Round answers to 0 decimal places, e.g. 38,548.)

I need step by step PLEASEE

Date Cash Paid Int Expense. Premium Amortization. Carrying bond value

1/1/16

1/1/17

1/1/18

1/1/19

1/1/20

Explanation / Answer

Date Cash interest Premium Carrying paid expense amortization bond value 12% 11% 1/1/2016 1,927,175 1/1/2017 218,400 211,980 6,420 1,920,755 1/1/2018 218,400 211,283 7,117 1,913,638 1/1/2019 218,400 210,500 7,900 1,905,738 1/1/2020 218,400 209,631 8,769 1,896,969 interest paid = 1,820,000*12%= 218400 interest expense = 1927175*11%= 211989                1,920,755 *11%= 211283                1,913,638*11%= 210500                 1,905,738*11%= 209631 premium amortized = cash paid - interest expense carrying value = previous year carrying value - premium amortized Calculation of bond issue price where n =11% time = 10 years principal     1,820,000*.35218 = 640967.6 (use PV of $1 table at 11% for 10 years) interest        218,400*5.88923 1286208 (use PV of ordinary annuity table issue price 1927175

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