On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds: Date January 1, Year 1 End of Year I End of Year 2 End of Year 3 End of Year 4 Cash Interest Amortization Balance $48,813 48,630 48,434 $3,600 ? ? $3,417 ? 3,376 $183 ? 210 ? ? 48,000 Required: 1. Complete the amortization schedule. 2. When the bonds mature at the end of Year 4, what amount of principal will Olive pay investors? 3. How much cash was received on the day the bonds were issued (sold)? 4. Were the bonds issued at a premium or a discount? If so, what was the amount of the premium or discount? 5. How much cash will be disbursed for interest each period and in total over the life of the bonds? 6. What is the coupon rate? 7. What was the annual market rate of interest on the date the bonds were issued? 8. What amount of interest expense will be reported on the income statement for Year 2 and Year 3? 9. What amount will be reported on the balance sheet at the end of Year 2 and Year 3?
On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds: Date January 1, Year 1 End of Year I End of Year 2 End of Year 3 End of Year 4 Cash Interest Amortization Balance $48,813 48,630 48,434 $3,600 ? ? $3,417 ? 3,376 $183 ? 210 ? ? 48,000 Required: 1. Complete the amortization schedule. 2. When the bonds mature at the end of Year 4, what amount of principal will Olive pay investors? 3. How much cash was received on the day the bonds were issued (sold)? 4. Were the bonds issued at a premium or a discount? If so, what was the amount of the premium or discount? 5. How much cash will be disbursed for interest each period and in total over the life of the bonds? 6. What is the coupon rate? 7. What was the annual market rate of interest on the date the bonds were issued? 8. What amount of interest expense will be reported on the income statement for Year 2 and Year 3? 9. What amount will be reported on the balance sheet at the end of Year 2 and Year 3?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
What does completing the amortization schedule mean? What are key ways to attack this problem? What should I pay special attention to?
Transcribed Image Text:On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on
December 31. The bonds mature at the end of four years. Olive uses the effective-interest
amortization method. The partially completed amortization schedule below pertains to the bonds:
Date
January 1, Year 1
End of Year I
End of Year 2
End of Year 3
End of Year 4
Cash
$3,600
?
?
?
Interest Amortization Balance
$48,813
48,630
48,434
$3,417
?
?
3,376
$183
?
210
?
?
48.000
Required:
1. Complete the amortization schedule.
2. When the bonds mature at the end of Year 4, what amount of principal will Olive pay investors?
3. How much cash was received on the day the bonds were issued (sold)?
4. Were the bonds issued at a premium or a discount? If so, what was the amount of the premium or
discount?
5. How much cash will be disbursed for interest each period and in total over the life of the bonds?
6. What is the coupon rate?
7. What was the annual market rate of interest on the date the bonds were issued?
8. What amount of interest expense will be reported on the income statement for Year 2 and Year 3?
9. What amount will be reported on the balance sheet at the end of Year 2 and Year 3?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
Expert Answers to Latest Homework Questions
Q: Please correct answer and don't use hend raiting and don't use Ai solution
Q: Refer to the accompanying scatterplot. a. Examine the pattern of all 10 points and subjectively…
Q: RBC Royal Bank approved a four-year $20,000 Royal Buy-Back Car Loan to Zaman at 7.5% compounded…
Q: 1.
value:
1.00 points
RBC Royal Bank approved a four-year $20,000 Royal Buy-Back Car Loan to Zaman…
Q: For the following circuit, if Vm = 109v, R1 = 39KΩ, R2 = 2KΩ, and Ro= 6KΩ, the minimum peak voltage…
Q: Please correct answer and don't use hend raiting
Q: A researcher has boiled her hypothesis test down to the following information.
Ho:
41, Ha μ> 41, a =…
Q: Use the pizza cost and the subway fare in the table below to find the regression equation, letting…
Q: Find the regression equation, letting the first variable be the predictor (x) variable. Using the…
Q: The data show the chest size and weight of several bears. Find the regression equation, letting…
Q: eBook
Pri
Question 5 Incorrect Mark 0.00 out of 10.00
Preparing a Job Order Cost Sheet
Flag question…
Q: 1.
value:
1.00 points
RBC Royal Bank approved a four-year $20,000 Royal Buy-Back Car Loan to Zaman…
Q: If the following voltage multiplier has 22 diodes, the maximum output voltage that can be obtained…
Q: 1. An intensity matrix of a continuous-time homogeneous Markov chain X is given by
-4
...
Q
0
...
1…
Q: For the following circuit, if Vm = 104v, R1 = 24 KΩ, R2 = 9KΩ, and Ro= 9KΩ, the maximum peak voltage…
Q: Alcala Imports has annual revenue of $506,000
with costs of $369,400. Depreciation is $64,900
and…
Q: 3. Why does ice have a lower density than liquid water?
Q: 2. Give 2 reasons why fluorine has the highest electronegativity of any element.
Q: please give a precise answer
Q: Blue Wave corp will need 275,000 units of raw materials next year. The purchase price of the raw…
Q: Determine the Safety Stock and Re-order Point given the fluctuating demand and lead time conditions…