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On January 1, 2024, Reyes Recreational Products issued $200,000, 12%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $188,058 to yield an annual return of 14%. 1.  Prepare an amortization schedule that determines interest at the effective interest rate. 2.  Prepare an amortization schedule by the straight-line method. 3.  Assuming the market rate is still 14%, what price would a second investor pay the first investor on June 30, 2026, for $28,000 of the bonds?

On January 1, 2024, Reyes Recreational Products issued $200,000, 12%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $188,058 to yield an annual return of 14%. 1.  Prepare an amortization schedule that determines interest at the effective interest rate. 2.  Prepare an amortization schedule by the straight-line method. 3.  Assuming the market rate is still 14%, what price would a second investor pay the first investor on June 30, 2026, for $28,000 of the bonds?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 8RE
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On January 1, 2024, Reyes Recreational Products issued $200,000, 12%, four-year bonds. Interest is paid semiannually on June 30 and December 31. The bonds were issued at $188,058 to yield an annual return of 14%.

1.  Prepare an amortization schedule that determines interest at the effective interest rate.

2.  Prepare an amortization schedule by the straight-line method.

3.  Assuming the market rate is still 14%, what price would a second investor pay the first investor on June 30, 2026, for $28,000 of the bonds?

 

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