PROBLEM 3 On June 30, 2018, Upton Inc. sold $3,000,000 (face value) of bonds. The bonds are dated June 30, 2018, pay interest annually on June 30, and will mature on June 30, 2021. The following schedule was prepared by the accountant for 2018. Annual Interest Period 1 Interest to be Paid $240,000 Interest Expense $263,250 Amortization $23,250 Unamortized Amount $75,000 51,750 1. What is the stated interest rate for this bond issue? 2. What is the market interest rate for this bond issue? Bond Carrying Value $2,925,000 2,948,250 Instructions On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.)

PROBLEM 3 On June 30, 2018, Upton Inc. sold $3,000,000 (face value) of bonds. The bonds are dated June 30, 2018, pay interest annually on June 30, and will mature on June 30, 2021. The following schedule was prepared by the accountant for 2018. Annual Interest Period 1 Interest to be Paid $240,000 Interest Expense $263,250 Amortization $23,250 Unamortized Amount $75,000 51,750 1. What is the stated interest rate for this bond issue? 2. What is the market interest rate for this bond issue? Bond Carrying Value $2,925,000 2,948,250 Instructions On the basis of the above information, answer the following questions. (Round your answer to the nearest dollar or percent.)

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter10: Long-term Liabilities

Section: Chapter Questions

Problem 10.15MCE

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