Learning Objective 2: Issue bonds payable (discount); record interest payments andthe related bond amortization using the effective-interest method) Energy Ltd. is authorizedto issue $3,000,000 of 1%, 10-year bonds payable. On December 31, 2018, when the marketinterest rate is 8%, the company issues $2,400,000 of the bonds. Energy amortizes bond discountusing the effective-interest method. The semiannual interest dates are June 30 and December 31.Requirements1. Use the PV function in Excel to calculate the issue price of the bonds.2. Prepare a bond amortization table for the term of the bonds using Excel.3. Record the issuance of the bonds payable on December 31, 2018; the first semiannualinterest payment on June 30, 2019; and the second payment on December 31, 2019.

Question

Learning Objective 2: Issue bonds payable (discount); record interest payments and
the related bond amortization using the effective-interest method) Energy Ltd. is authorized
to issue $3,000,000 of 1%, 10-year bonds payable. On December 31, 2018, when the market
interest rate is 8%, the company issues $2,400,000 of the bonds. Energy amortizes bond discount
using the effective-interest method. The semiannual interest dates are June 30 and December 31.
Requirements
1. Use the PV function in Excel to calculate the issue price of the bonds.
2. Prepare a bond amortization table for the term of the bonds using Excel.
3. Record the issuance of the bonds payable on December 31, 2018; the first semiannual
interest payment on June 30, 2019; and the second payment on December 31, 2019.

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Finance

Managing investments: Investing in stocks, bonds and other alternatives,Mutual Funds

Bonds

Related Finance Q&A

Find answers to questions asked by students like you.

Q: Suppose that you will receive annual payments of $16,500 for a period of 10 years. The first payment...

A: Present value is the current worth of the future payments to be made at a specific interest rate. --...

Q: A four-year maturity deep discount coupon corporate bond with a required rate of return (YTM) of 12 ...

A: A zero-coupon bond is an interest-free loan pledge whose transactions instead of interest at a low d...

Q: Describe the revaluation model.

A: Introduction: The revaluation model stretches a business the option of carrying a fixed asset at its...

Q: An analyst has projected that a company will have assets of €2,000 at year-end and liabilities of €1...

A: The fund that is raised by the company from the shareholders is term as the owners’ equity. It inclu...

Q: What factors would result in property increasing in value over a holding period?

A: One holding period is the length of time a creditor retains or the time between purchasing and selli...

Q: Solve it early all subparts  upvote.  Handwriting or typed answer onlys  Note:-not explain in excel ...

A: Amount = Principle* (1+ interest)^time where, Principle = borrowed amount Amount = Total to be repai...

Q: 2. A loan of P2,000 is made for a period of 13 months. from January 1 to-lanuary 31 the following ye...

A: Click to see the answer

Q: The following are various forms of arbitrage. 1)Fixed income arbitrage 2)Risk arbitrage 3)Covered in...

A: Arbitrage means taking a buy and sell position on an asset simultaneously, at different prices, to p...

Q: Find the following values (compounding/discounting occurs annually):  A. An initial $500 compounded ...

A: Formula: