Question

Required Information [The following information applies to the questions displayed below) Coney Island Entertainment issues $1.600,000 of 7% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Calculate the issue price of a bond and complete the first three rows of an amortization schedule when 3. The market Interest rate is 6% and the bonds Issue at a premium (FV of $1. PV of $1. FVA of $1. and PVA of $1 (Use appropriate factor(s) from the tables provided. Do not round Interest rate factors. Round your answers to nearest whole dollar) Answer is complete and correct. Issue price 1.756.6620 Answer is complete but not entirely correct. Date Cash Paid Interest Expense Change in Camping Value Carrying Value 1/1/2021 8/30/2021 5 S S 58.000 58.000 52,700 52.801 3:3008 3.300 1.756.882 1,753.362 1.740.083 12312021 < Prev 18 or 23 Ne

Answer 1

Calculation of issue price using PV tables and calculation of the change in carrying value:

B А 1 Cost of bonds 1600000 2 Number of years 15 3 Coupan rate (semiannually) |0.07 4 Market rate 0.06 Cash paid each semiannual 5 period for interest =B1*B3*(1/2) Calculation of issue price 7 Present value of principal =B1*0.4119 8 Present value of principal =B5*19.6004 9 Issue price =B7+B8 6 10 Date Cash Paid Interest Expense | Change in Carrying Vaue Carrying Value 11 12 44197 13 06/30/21 14 12/31/21 =B5 =B5 =E12*(B4/2) =C13-B13 =E13*(B4/2) =C14-B14 =B9 =E12+D13 =E13+D14

Results of the excel sheet are as follows:

А C 1 Cost of bonds 1600000 2 Number of years 15 3 Coupan rate (semiannually). 4 Market rate 6% Cash paid each semiannual 5 period for interest 56000 6 Calculation of issue price 7 Present value of principal $659,040 8 Present value of principal $1,097,622 9 Issue price $1,756,662 10 Change in Interest Carrying Date Cash Paid Carrying Expense 11 | Vaue 12 01-01-21 $1,756,662 13 06/30/21 56000 52700 -3300 $1,753,362 14 12/31/21 56000 52601 -3399 $1,749,963 Value