Question

Marin Company sells 8% bonds having a maturity value of $1,430,000 for $1,321,582. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1. Determine the effective-interest rate. (Round answer to 0 decimal places, e.g. 18%.) The effective-interest rate 10 % Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 38,548.) Schedule of Discount Amortization Effective-Interest Method Interest Interest Discount Carrying Amount of Bonds Amortized Payable Year ense Jan. 1, 2020 2$ Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 Dec. 31, 2024

Answer 1

rate positively..

	Computaton of effective interest rate -
	we have to use financial calculator -
	put in calculator
	FV		1,430,000
	PV		(1,321,582)
	PMT		114,400
	N		5
	Compute I		10%
	Ans =		10%
	Amortization table
	Year	Interest payable	Interest expenses	Discount amortization	Carrying amount of bonds
	Jan 1 2020				1,321,582
	Dec 31 2020	114,400	132,159	17,759	1,339,341
	Dec 31 2021	114,400	133,934	19,534	1,358,875
	Dec 31 2022	114,400	135,888	21,488	1,380,363
	Dec 31 2023	114,400	138,037	23,637	1,404,000
	Dec 31 2024	114,400	140,400	26,000	1,430,000