(Learning Objective 2: Issue bonds payable at a discount and amortize bonds usingthe effective-interest method) Pearce Corporation issued $580,000 of 6%, 10-year bondspayable on March 31, 2019. The market interest rate at the date of issuance was 10%, and thebonds pay interest semiannually. Pearce Corporation’s year-end is March 31.1. Using the PV function in Excel, calculate the issue price of the bonds.2. Prepare an effective-interest amortization table for the bonds through the first three interestpayments. Round amounts to the nearest dollar.3. Record Pearce Corporation’s issuance of the bonds on March 31, 2019, and payment of thefirst semiannual interest amount and amortization of the bond discount on September 30,2019. Explanations are not required.
(Learning Objective 2: Issue bonds payable at a discount and amortize bonds using
the effective-interest method) Pearce Corporation issued $580,000 of 6%, 10-year bonds
payable on March 31, 2019. The market interest rate at the date of issuance was 10%, and the
bonds pay interest semiannually. Pearce Corporation’s year-end is March 31.
1. Using the PV function in Excel, calculate the issue price of the bonds.
2. Prepare an effective-interest amortization table for the bonds through the first three interest
payments. Round amounts to the nearest dollar.
3. Record Pearce Corporation’s issuance of the bonds on March 31, 2019, and payment of the
first semiannual interest amount and amortization of the bond discount on September 30,
2019. Explanations are not required.
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