5.5 Problem #1 Accounting for Bonds
Exercises
Using the bond information from the start of this chapter, and using the templates below, what would be the annual interest expenses and balances if the discount (or market) rate at the time of issuance of the bond were:
- 7%
- 8%
1.
| End of Year | Coupon Interest | Interest Expense | Amortization | Debt Balance |
|---|---|---|---|---|
| 0 | ||||
| 1 | $70,000 | |||
| 2 | $70,000 | |||
| 3 | $70,000 | |||
| Totals | $210,000 |
2.
| End of Year | Coupon Interest | Interest Expense | Amortization | Debt Balance |
|---|---|---|---|---|
| 0 | ||||
| 1 | $70,000 | |||
| 2 | $70,000 | |||
| 3 | $70,000 | |||
| Totals | $210,000 |
