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Calculate issue price and the total bond interest expense

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Company B Issued bonds with a par value of $680,000 and a five-year life on January 1, 2019. The bonds pay interest on June 30 and December 31. The contract interest rate is 8%. The market interest rate was 9% on the original issue date.

Question 1. Calculate the issue price and the total bond interest expense over the life of the bonds.

Question 2. Amortization table using the effective interest method

Question 3. Show the journal entries that Company B would make to record the first two interest payments. Assume a December 31 year end.

Question 4. Use the original market interest rate to calculate the present value of the remaining cash flows for these bonds as of December 31, 2021. Compare your answer with the amount shown on the amortization table as the balance for that date and explain your findings

Reference no: EM132495416

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