Issue of bond at discount: When the coupon rate or contract rate of a bond is lower than the market interest rate, the bond is being issued at discount. The selling price of the bond will be lower than the face value of the bond under issue of bond at discount. To determine : 1. Compute the amount of discount on these bonds issuance 2. How much total bonds interest expense will be recognized over the life of these bonds? 3. Prepare an amortization table for these bonds using effective interest method.

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Chapter 14, Problem 13E

To determine

Issue of bond at discount:

When the coupon rate or contract rate of a bond is lower than the market interest rate, the bond is being issued at discount. The selling price of the bond will be lower than the face value of the bond under issue of bond at discount.

To determine:

1. Compute the amount of discount on these bonds issuance

2. How much total bonds interest expense will be recognized over the life of these bonds?

3. Prepare an amortization table for these bonds using effective interest method.

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