BU curriculum corporation issued $900,000 of 8% bonds on November 1, 2018, due on November 1,...

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BU curriculum corporation issued $900,000 of 8% bonds on November 1, 2018, due on November 1,...

BU curriculum corporation issued $900,000 of 8% bonds on November 1, 2018, due on November 1, 2023. The interest is to be paid twice a year on Nov. 1 and May 1. The bonds were sold to yield 10% effective annual interest. BU curriculum corporation closes its books annually on December 31.

A. Complete an amortization schedule for the above bond (for all periods) in a similar format as below. (round all answers to nearest dollar.) Use the effective interest method.

Date

Credit Cash

Debit interest expense

credit bond discount

carrying amount of bonds

Nov. 1 2018

use the PV formula in excel

May. 1 2019

....continue schedule

business accounting

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Answer 1

Answer #1

Face Value of Bonds = $900,000

Annual Coupon Rate = 8%
Semiannual Coupon Rate = 4%
Semiannual Coupon = 4% * $900,000
Semiannual Coupon = $36,000

Annual Interest Rate = 10%
Semiannual Interest Rate = 5%

Time to Maturity = 5 years
Semiannual Period = 10

Issue Value of Bonds using PV formula:

Issue Value of Bonds = “=PV(5%, 10, 36000, 900000)”
Issue Value of Bonds = $830,504

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Answer 2

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