Compute for the initial carrying amount of the bonds

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Q1: On January 1, 20x1 an entity issues bonds with face amount of 5,000,000 for 5,773,129. The bonds mature on December 31, 20x3 and pat annual interest of 14%. The effective rate is 8%. Prepare the amortization table.

Q2: On march 1 , 2002 Pyne furniture co issued P 700,000 of the 10 percent bonds to yield 8 percent. Interest is payable semiannually on February 28 and August 31. The bonds mature in 10 years. Pyne Furniture Co is a calendar year corporation.  

a. Determine the issue price of the bonds. show your computations.

b. Prepare an amortization table using the effective interest method.

Q3: On January 1, 20x1 an entity issues bonds with face amount of 8,000,000 for 8 600,000. The bonds mature on December 31, 20x4 and pay annual interest of 11% every December 31. The entity incurs transaction cost of 81 645, The effective interest rate adjusted for transaction costs is 9%

a. Compute for the initial carrying amount of the bonds.

b. Compute for net discount or net premium (including effect of bond issue cost) from the issuance on initial recognition.

c. Are the periodic interest payments greater than or less than the periodic interest expenses?

Reference no: EM132887626

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