On January 1 of this year, Barnett Corporation sold bonds with a face value of $504,000 and a coupon rate of 5 percent. The bonds mature in 8 years and pay interest annually on December 31. Barnett uses the effective-interest amortization method. Ignore any tax effects. Each case is independent of the other cases. (FV of $1. PV of $1. FVA of $1, and PVA of $1) Required: 1. Complete the following table. The interest rates provided are the annual market rate of interest on the date the bonds were issued. Note: Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount. a. Cash received at issuance b. Interest expense recorded in Year 1 c. Cash paid for interest in Year 1 d. Cash paid at maturity for bond principal Answer is complete but not entirely correct. Case A (5 Case B (6 percent) percent) $ $ $ $ 504,000 $ 25,200 $ 25,200 $ 504,000 $ Case C (4 percent) 537,933 21,518 25,200 504,000 472,697 * $ $ 28,362 25,200 504,000 $ $

On January 1 of this year, Barnett Corporation sold bonds with a face value of $504,000 and a coupon rate of 5 percent. The bonds mature in 8 years and pay interest annually on December 31. Barnett uses the effective-interest amortization method. Ignore any tax effects. Each case is independent of the other cases. (FV of $1. PV of $1. FVA of $1, and PVA of $1) Required: 1. Complete the following table. The interest rates provided are the annual market rate of interest on the date the bonds were issued. Note: Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount. a. Cash received at issuance b. Interest expense recorded in Year 1 c. Cash paid for interest in Year 1 d. Cash paid at maturity for bond principal Answer is complete but not entirely correct. Case A (5 Case B (6 percent) percent) $ $ $ $ 504,000 $ 25,200 $ 25,200 $ 504,000 $ Case C (4 percent) 537,933 21,518 25,200 504,000 472,697 * $ $ 28,362 25,200 504,000 $ $

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 7MCQ

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