Please explain how to arrive at the "Market Price of Bonds (% of face) = 94.285%" section in the excel sheet. Haiku Inc. issued $600,000 of 10-year bonds with a statedrate of 11% when the market rate was 12%. The bonds payinterest semi-annually. Assume that the bonds were issuedfor $565,710. Prepare an amortization table for the firstthree payments.SemiannualSemiannualSemiannual .AmortizationInterestInterestInterest ExpenseDiscountPeriodPayment$33.943$33,000$943BONDS PAYABLE - EFFECTIVE-INTEREST AMORTIZATION METHOD - DISCOUNT (HW-02, #1)SemiannualBond DiscountBeginningInterest Period Carrying Value Interest ExpenseSemiannualSemiannualUnamortizedEnding CarryInterest CashAmortizedBond DiscountValuePayment34,290565,7101565,71033,94333,00094333,347566,6532566,65333,99933,00099932,348567,6523567,65234,05933,0001,05931,289568,711Bond Face Value =$600,000%3DAnnual Interest Rate =11.0%Time Period - Semiannual (years) =0.5Market Price of Bonds (% of Face) =94.285%Current Market Interest Rate =12.0%

The price for bond implies to the consideration amount paid by investor for purchasing bond. In…

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Business

Accounting

Please explain how to arrive at the "Market Price of Bonds (% of face) = 94.285%" section in the excel sheet.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 15MCQ

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Question

100%

Please explain how to arrive at the "Market Price of Bonds (% of face) = 94.285%" section in the excel sheet.

Haiku Inc. issued $600,000 of 10-year bonds with a stated
rate of 11% when the market rate was 12%. The bonds pay
interest semi-annually. Assume that the bonds were issued
for $565,710. Prepare an amortization table for the first
three payments.
Semiannual
Semiannual
Semiannual .
Amortization
Interest
Interest
Interest Expense
Discount
Period
Payment
$33.943
$33,000
$943
BONDS PAYABLE - EFFECTIVE-INTEREST AMORTIZATION METHOD - DISCOUNT (HW-02, #1)
Semiannual
Bond Discount
Beginning
Interest Period Carrying Value Interest Expense
Semiannual
Semiannual
Unamortized
Ending Carry
Interest Cash
Amortized
Bond Discount
Value
Payment
34,290
565,710
1
565,710
33,943
33,000
943
33,347
566,653
2
566,653
33,999
33,000
999
32,348
567,652
3
567,652
34,059
33,000
1,059
31,289
568,711
Bond Face Value =
$600,000
%3D
Annual Interest Rate =
11.0%
Time Period - Semiannual (years) =
0.5
Market Price of Bonds (% of Face) =
94.285%
Current Market Interest Rate =
12.0%

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