Question

See all photos + Add to On January 1, a company purchased 5%, 10 year corporate bonds for $55,537,005 as an investment. The bonds have a face amount of 560 million and are priced to yield 6%. Interest is paid semiannually 5.83 Prepare a partial amortization table at the effective interest rate on June 30 and December 31 Prepare the journal entries necessary to record revenue at the effective interest rate on June 30 and December 31 Complete this question by entering your answers in the tabs below. Amort Table General Journal Prepare a partial amortization table at the effective interest rate on June 30 and December 31. (Round your intermediate calculations to the nearest dollar amount Enter your answers in whole dollars. Round final answers to the nearest whole dollar Period-End Cash Interest Received Bond Interest Revenue Discount Amortization Carrying Value June 30 General Journal > о не на во

Answer 1

1)

Period -end	cash interest received[A]	Bond interest revenue[B]	Discount amortization	carrying value
1Jan				55537005
30 June	1500000	55537005*3%=1666110	166110	55537005+166110= 55703115
31Dec	1500000	55703115*3%= 1671093	171093	55703115+171093= 55874208

**Semiannual coupon rate = 5*6/12 =2.5%     [2semiannual period in a year comprising of 6 month each]

semiannual interest received = 60,000,000*2.5%= 1500000

semiannual yield =6*6/12 = 3%

2)

Date	Account title	Debit	credit
30 June	cash	1500000
	Discount on bond receivable	166110
	Interest revenue		1666110
31Dec	cash	1500000
	Discount on bond receivable	171093
	Interest revenue		1671093