Determine the gain or loss on retirement of the bonds

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Question

On January 1, 2018, Reyes Company issued 5-year, $600,000, with an 8% stated rate. The market rate for other similar instruments was 10%. The bonds pay interest semi-annually each July 1 and January 1.

Required:

1. Using the time value of money tables, determine the price of the bonds. (Note: You MUST show all calculations using Time Value of Money tables. I will not accept answers that were derived using Excel formulas or online tables.

2. Make a bond amortization table, showing the semi-annual interest payments, the interest expense and the carrying value of the bond for all five years.

3. On July 1, 2021, Reyes retired the bonds at 98 (meaning 98% of face value). Determine the gain or loss on retirement of the bonds. You MUST show your calculations.

Reference no: EM132345391

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