Stanford issues bonds dated January 1, 2021, with a par value of $253,000. The bonds' annual contract rate is 6%, 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 8%, and the bonds are sold for $239,733. 1. What is the amount of the discount 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 Cash Interest Bond Interest Paid Expense Discount Amortization Unamortized Discount Carrying Value 01/01/2021 06/30/2021 $ 5,060 $ 9,589 12/31/2021 5,060 9,548 06/30/2022 5,060 9,506 12/31/2022 5,060 9,462 06/30/2023 5,060 9,416 12/31/2023 5,060 5,060 0 Total $ 30,360 $ 30,360 < Required 2 Required 3 >
Stanford issues bonds dated January 1, 2021, with a par value of $253,000. The bonds' annual contract rate is 6%, 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 8%, and the bonds are sold for $239,733. 1. What is the amount of the discount 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 Cash Interest Bond Interest Paid Expense Discount Amortization Unamortized Discount Carrying Value 01/01/2021 06/30/2021 $ 5,060 $ 9,589 12/31/2021 5,060 9,548 06/30/2022 5,060 9,506 12/31/2022 5,060 9,462 06/30/2023 5,060 9,416 12/31/2023 5,060 5,060 0 Total $ 30,360 $ 30,360 < Required 2 Required 3 >
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Stanford issues bonds dated January 1, 2021, with a par value of $253,000. The bonds' annual contract rate is 6%, 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 8%,
and the bonds are sold for $239,733.
1. What is the amount of the discount 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
Cash Interest Bond Interest
Paid
Expense
Discount
Amortization
Unamortized
Discount
Carrying Value
01/01/2021
06/30/2021
$
5,060 $
9,589
12/31/2021
5,060
9,548
06/30/2022
5,060
9,506
12/31/2022
5,060
9,462
06/30/2023
5,060
9,416
12/31/2023
5,060
5,060
0
Total
$
30,360 $
30,360
< Required 2
Required 3 >
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