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Calculate the present value of the bond

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Question - Arbuckle Ltd. issued $80,000 of four-year, 7% bonds dated 1 December 20X5. Interest is payable semi-annually on 31 May and 30 November. The bonds were issued on 1 February 20X6. The effective interest rate was 8%.

Required -

1. Calculate the present value of the bond assuming that it had been issued on 1 December 20X5.

2. Prepare a bond amortization schedule. Use the effective-interest method of amortization.

3. Calculate the proceeds of the bond reflecting the fact that it was issued on 1 February 20X6. Also calculate the accrued interest.

4. Based on your calculation in (3), how much amortization is included in interest expense for the period ended 31 May 20X6?

Reference no: EM133099883

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