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National Company issued 20-year bonds, dated January 1, 2017, with a face amount of $600,000 on January 1, 2017

Posted on Posted in Accounting, ACT202 Introduction to Managerial Accounting

Problem for Bonds on Excel

GIVEN:

National Company issued 20-year bonds, dated January 1, 2017, with a face amount
of $600,000 on January 1, 2017.  The contract rate for these bonds is 8%.  The bonds
mature on December 31, 2036.  The market yield for bonds of similar risk and maturity
was 10%.  Cash interest payments are made semiannually on June 30 and December 31.

REQUIRED:

a.  Prepare a set of “Given” information as prepared in the lab in order to help
you set up the Bond Amortization Table.  Determine the price of the bonds on
January 1, 2017 as well as the amount of Cash interest paid each period.
b.  Prepare the Bond Amortization Table  for this bond using the Effective
Interest Method (as performed in the lab); be certain to include column titles.

Inputs:
Coupon rate 8%
Face value 600,000
N 40 20 years, semiannual
I/Y 5.00% YTM/2
Bond price $497,045.48
Date Cash paid Interest Expense Discount Amortization Carrying value
1/1/2017 497,045.48
6/30/2017 24,000.00 24,852.27 852.27 497,897.76
12/31/2017 24,000.00 24,894.89 894.89 498,792.64
6/30/2018 24,000.00 24,939.63 939.63 499,732.28
12/31/2018 24,000.00 24,986.61 986.61 500,718.89
6/30/2019 24,000.00 25,035.94 1,035.94 501,754.83
12/31/2019 24,000.00 25,087.74 1,087.74 502,842.58
6/30/2020 24,000.00 25,142.13 1,142.13 503,984.70
12/31/2020 24,000.00 25,199.24 1,199.24 505,183.94
6/30/2021 24,000.00 25,259.20 1,259.20 506,443.14
12/31/2021 24,000.00 25,322.16 1,322.16 507,765.29
6/30/2022 24,000.00 25,388.26 1,388.26 509,153.56
12/31/2022 24,000.00 25,457.68 1,457.68 510,611.24
6/30/2023 24,000.00 25,530.56 1,530.56 512,141.80
6/30/2023 24,000.00 25,607.09 1,607.09 513,748.89
12/31/2024 24,000.00 25,687.44 1,687.44 515,436.33
6/30/2024 24,000.00 25,771.82 1,771.82 517,208.15
12/31/2025 24,000.00 25,860.41 1,860.41 519,068.56
6/30/2025 24,000.00 25,953.43 1,953.43 521,021.98
12/31/2026 24,000.00 26,051.10 2,051.10 523,073.08
6/30/2026 24,000.00 26,153.65 2,153.65 525,226.74
12/31/2027 24,000.00 26,261.34 2,261.34 527,488.07
6/30/2027 24,000.00 26,374.40 2,374.40 529,862.48
12/31/2028 24,000.00 26,493.12 2,493.12 532,355.60
6/30/2028 24,000.00 26,617.78 2,617.78 534,973.38
6/30/2029 24,000.00 26,748.67 2,748.67 537,722.05
6/30/2029 24,000.00 26,886.10 2,886.10 540,608.15
6/30/2030 24,000.00 27,030.41 3,030.41 543,638.56
6/30/2030 24,000.00 27,181.93 3,181.93 546,820.49
6/30/2031 24,000.00 27,341.02 3,341.02 550,161.51
6/30/2031 24,000.00 27,508.08 3,508.08 553,669.59
6/30/2032 24,000.00 27,683.48 3,683.48 557,353.07
6/30/2032 24,000.00 27,867.65 3,867.65 561,220.72
6/30/2033 24,000.00 28,061.04 4,061.04 565,281.76
6/30/2033 24,000.00 28,264.09 4,264.09 569,545.85
6/30/2034 24,000.00 28,477.29 4,477.29 574,023.14
6/30/2034 24,000.00 28,701.16 4,701.16 578,724.30
6/30/2035 24,000.00 28,936.21 4,936.21 583,660.51
6/30/2035 24,000.00 29,183.03 5,183.03 588,843.54
6/30/2036 24,000.00 29,442.18 5,442.18 594,285.71
6/30/2036 24,000.00 29,714.29 5,714.29 600,000.00

 

 

 

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