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Quatro Company issues bonds dated January 1, 2020, with a par value of $770,000. The bonds' annual contract rate is 12%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $809,071. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare an effective interest amortization table for these bonds. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an effective interest amortization table for these bonds. Note: Round all amounts to the nearest whole dollar.

Quatro Company issues bonds dated January 1, 2020, with a par value of $770,000. The bonds' annual contract rate is 12%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $809,071. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare an effective interest amortization table for these bonds. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an effective interest amortization table for these bonds. Note: Round all amounts to the nearest whole dollar.

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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Quatro Company issues bonds dated January 1, 2020, with a par value of $770,000. The bonds' annual contract rate is 12%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $809,071. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare an effective interest amortization table for these bonds. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an effective interest amortization table for these bonds. Note: Round all amounts to the nearest whole dollar. Semiannual Interest Period-End Paid Cash Interest Bond Interest Premium Expense Amortization Unamortized Premium Carrying Value 01/01/2020 $ 39,071 $ 809,071 06/30/2020 $ 46,200 12/31/2020 46,200 06/30/2021 46,200 12/31/2021 46,200 06/30/2022 46,200 12/31/2022 46,200 46,200
Transcribed Image Text:Quatro Company issues bonds dated January 1, 2020, with a par value of $770,000. The bonds' annual contract rate is 12%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 10%, and the bonds are sold for $809,071. 1. What is the amount of the premium on these bonds at issuance? 2. How much total bond interest expense will be recognized over the life of these bonds? 3. Prepare an effective interest amortization table for these bonds. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Prepare an effective interest amortization table for these bonds. Note: Round all amounts to the nearest whole dollar. Semiannual Interest Period-End Paid Cash Interest Bond Interest Premium Expense Amortization Unamortized Premium Carrying Value 01/01/2020 $ 39,071 $ 809,071 06/30/2020 $ 46,200 12/31/2020 46,200 06/30/2021 46,200 12/31/2021 46,200 06/30/2022 46,200 12/31/2022 46,200 46,200
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