Hambelton Ltd. issued $3,750,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annually and is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. The accounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which the bonds were issued. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) Price of Bond $ 2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "O" wherever required.) Date Opening 1 2 3 4 5 6 7 3,918,281 Interest Payment Interest Expense $ 93,750 $ 93,750 93,750 93,750 93,750 93,750 93,750 Premium Amortization 78,366 $ 78,058 77,744 77,424 77,097 76,764 76,425 15,384 15.692 16,006 16,326 16,653 16,986 17,325 Unamortized Premium $ 168,281 $ 152,897 137,205 121,199 104,873 88,220 71,234 53,909 Net Bond Liability 3,918,281 3,902,897 3,887,205 3,871,199 3,854,873 3,838,220 3,821,234 3,803,909
Hambelton Ltd. issued $3,750,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annually and is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. The accounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Use appropriate factor(s) from the tables provided.) Required: 1. Determine the price at which the bonds were issued. (Round time value factor to 5 decimal places. Do not round intermediate calculations. Round your final answer to the nearest whole dollar amount.) Price of Bond $ 2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not round Intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter "O" wherever required.) Date Opening 1 2 3 4 5 6 7 3,918,281 Interest Payment Interest Expense $ 93,750 $ 93,750 93,750 93,750 93,750 93,750 93,750 Premium Amortization 78,366 $ 78,058 77,744 77,424 77,097 76,764 76,425 15,384 15.692 16,006 16,326 16,653 16,986 17,325 Unamortized Premium $ 168,281 $ 152,897 137,205 121,199 104,873 88,220 71,234 53,909 Net Bond Liability 3,918,281 3,902,897 3,887,205 3,871,199 3,854,873 3,838,220 3,821,234 3,803,909
Excel Applications for Accounting Principles
4th Edition
ISBN:9781111581565
Author:Gaylord N. Smith
Publisher:Gaylord N. Smith
ChapterMB: Model-building Problems
Section: Chapter Questions
Problem 13M
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Transcribed Image Text:Hambelton Ltd. issued $3,750,000 of 5% bonds payable on 1 September 20X9 to yield 4%. Interest on the bonds is paid semi-annually
and is payable each 28 February and 31 August. The bonds were dated 1 March 20X8, and had an original term of five years. The
accounting period ends on 31 December. The effective-interest method is used. (PV of $1, PVA of $1, and PVAD of $1.) (Use
appropriate factor(s) from the tables provided.)
Required:
1. Determine the price at which the bonds were issued. (Round time value factor to 5 decimal places. Do not round intermediate
calculations. Round your final answer to the nearest whole dollar amount.)
Price of Bond $
2. Prepare a bond amortization table for the life of the bond. (Round time value factor to 5 decimal places. Do not round
Intermediate calculations. Round your final answers to the nearest whole dollar amount. Leave no cells blank - be certain to enter
"O" wherever required.)
Date
Opening
1
2
3
4
5
6
7
3,918,281
Interest
Payment
Interest
Expense
$ 93,750 $
93,750
93,750
93,750
93,750
93,750
93,750
Premium
Amortization
78,366 $
78,058
77,744
77,424
77,097
76,764
76,425
15,384
15.692
16,006
16,326
16,653
16,986
17,325
Unamortized
Premium
$ 168,281 $
152,897
137,205
121,199
104,873
88,220
71,234
53,909
Net Bond
Liability
3,918,281
3,902,897
3,887,205
3,871,199
3,854,873
3,838,220
3,821,234
3,803,909
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