Calculations Marketing Inc. issued 8.5% bonds with a par value of $530,000 and a five-year life on January 1, 2023, for $540,747. The bonds pay interest on June 30 and December 31. The market interest rate was 8% on the original issue date. Use TABLE 14A1 and TABLE 14A.2. (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the total bond interest expense over the life of the bonds. Total interest expense 2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Period Ending Jan, 1/23 June 30/23 Cash Interest Paid Period Interest Expense Premium Unamortized Amort. premium Carrying Value
Calculations Marketing Inc. issued 8.5% bonds with a par value of $530,000 and a five-year life on January 1, 2023, for $540,747. The bonds pay interest on June 30 and December 31. The market interest rate was 8% on the original issue date. Use TABLE 14A1 and TABLE 14A.2. (Use appropriate factor(s) from the tables provided.) Required: 1. Calculate the total bond interest expense over the life of the bonds. Total interest expense 2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.) Period Ending Jan, 1/23 June 30/23 Cash Interest Paid Period Interest Expense Premium Unamortized Amort. premium Carrying Value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Calculations Marketing Inc. issued 8.5% bonds with a par value of $530,000 and a five-year life on January 1, 2023, for
$540,747. The bonds pay interest on June 30 and December 31. The market interest rate was 8% on the original issue date. Use
TABLE 14A1 and TABLE 14A.2. (Use appropriate factor(s) from the tables provided.)
Required:
1. Calculate the total bond interest expense over the life of the bonds.
Total interest expense
2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final
answers to the nearest whole dollar.)
Period Cash Interest
Ending
Paid
Jan, 1/23
June 30/23
Period
Interest
Expense
Premium
Amort.
Unamortized
premium
Carrying Value
Transcribed Image Text:2. Prepare an amortization table using the effective interest method. (Do not round intermediate calculations. Round the final
answers to the nearest whole dollar.)
Period
Ending
Jan, 1/23
June 30/23
www.
Dec. 31/23
Beddendam
June 30/24
WWW.CEN
Dec. 31/24
F
June 30/25
Dard sorze
Dec. 31/25
June 30/26
Dec. 31/26
June 30/27
Dec. 31/27
Totals
Cash Interest
Paid
Show Transcribed Text
View transaction list
Period
Interest.
Expense
Journal entry worksheet
<
2
3. Show the journal entries that Calculations Marketing Inc. would make to record the first two interest payments assuming a
December 31 year-end. (Do not round intermediate calculations. Round the final answers to the nearest whole dollar.)
Date
June 30, 2023
Note: Enter debits before credits.
Þ
Record the six months' interest and premium amortization.
Show Transcribed Text
Premium
Amort.
Present value of the remaining cash flows
4
Unamortized
premium
Show Transcribed Text
3
General Journal
Carrying Value
Debit
Credit
4. Use the original market interest rate to calculate the present value of the remaining cash flows for these bonds as of
December 31, 2025. Compare your answer with the amount shown on the amortization table as the balance for that date. (Do
not round intermediate calculations. Round the final answers to the nearest whole dollar)
>
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