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On January 1, 2021, Tennessee Harvester Corporation Issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment 1 2 3 4 5 6 38 39 48 Cash Payment Effective Increase in Interest Balance " 230,997 231,597 232,221 216,000 216,000 216,000 216,000 232,869 216,000 233,544 216,000 234,246 216,000 280,008 216,000 282,568 216,000 285,230 14,997 15,597 16,221 16,869 17,544 18,246 64,988 66,568 69,230 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity In years? 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? Outstanding Balance 5,774,920 5,789,917 5,885,514 5,821,735 5,838,604 5,856,148 5,874,394 7,064,202 7,130,770 7,200,000 5. What is the effective annual Interest rate? 7. What is the total cash Interest paid over the term to maturity? 3. What is the total effective Interest expense recorded over the term to maturity?

On January 1, 2021, Tennessee Harvester Corporation Issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment 1 2 3 4 5 6 38 39 48 Cash Payment Effective Increase in Interest Balance " 230,997 231,597 232,221 216,000 216,000 216,000 216,000 232,869 216,000 233,544 216,000 234,246 216,000 280,008 216,000 282,568 216,000 285,230 14,997 15,597 16,221 16,869 17,544 18,246 64,988 66,568 69,230 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity In years? 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? Outstanding Balance 5,774,920 5,789,917 5,885,514 5,821,735 5,838,604 5,856,148 5,874,394 7,064,202 7,130,770 7,200,000 5. What is the effective annual Interest rate? 7. What is the total cash Interest paid over the term to maturity? 3. What is the total effective Interest expense recorded over the term to maturity?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2021, Tennessee Harvester Corporation Issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment LAMAN 1229 38 1. 2. 39 40 3. Cash Payment 216,000 230,997 216,000 231,597 216,000 232, 221 216,000 232,869 216,000 233,544 216,000 234,246 216,000 216,000 Effective Interest 280,008 282,568 216,000 285,230 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity In years? 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? 6. What is the effective annual Interest rate? Face amount Initial selling price Term to maturity Increase in Balance 4. 5. 6. Effective annual interest rate Interest is determined by what approach? Annual interest rate 14,997 15,597 16,221 16,869 17,544 18,246 7. What is the total cash Interest paid over the term to maturity? 8. What is the total effective interest expense recorded over the term to maturity? 7. Total cash interest paid 8. Effective interest expense 64,088 66,568 69,230 Outstanding Balance 5,774,920 5,789,917 5,885,514 5,821,735 5,838,604 5,856,148 5,874,394 7,064,202 7,130,770 7,200,000 years
Transcribed Image Text:On January 1, 2021, Tennessee Harvester Corporation Issued debenture bonds that pay Interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below. Payment LAMAN 1229 38 1. 2. 39 40 3. Cash Payment 216,000 230,997 216,000 231,597 216,000 232, 221 216,000 232,869 216,000 233,544 216,000 234,246 216,000 216,000 Effective Interest 280,008 282,568 216,000 285,230 Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity In years? 4. Interest is determined by what approach? 5. What is the stated annual Interest rate? 6. What is the effective annual Interest rate? Face amount Initial selling price Term to maturity Increase in Balance 4. 5. 6. Effective annual interest rate Interest is determined by what approach? Annual interest rate 14,997 15,597 16,221 16,869 17,544 18,246 7. What is the total cash Interest paid over the term to maturity? 8. What is the total effective interest expense recorded over the term to maturity? 7. Total cash interest paid 8. Effective interest expense 64,088 66,568 69,230 Outstanding Balance 5,774,920 5,789,917 5,885,514 5,821,735 5,838,604 5,856,148 5,874,394 7,064,202 7,130,770 7,200,000 years
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