On January 1, 2013, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on...
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Accounting
On January 1, 2013, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:
Payment
Cash Payment
Effective Interest
Increase in Balance
Outstanding Balance
6,047,387
1
292,000
302,369
10,369
6,057,756
2
292,000
302,888
10,888
6,068,644
3
292,000
303,432
11,432
6,080,076
4
292,000
304,004
12,004
6,092,080
5
292,000
304,604
12,604
6,104,684
6
292,000
305,234
13,234
6,117,918
~
~
~
~
~
~
~
~
~
~
~
~
~
~
~
38
292,000
355,060
63,060
7,164,267
39
292,000
358,213
66,213
7,230,480
40
292,000
361,520
69,520
7,300,000
What is the face amount of the bonds?
What is the initial selling price of the bonds?
What is the term to maturity in years?
Interest is determined by what approach?
What is the stated annual interest rate?
What is the effective annual interest rate?
What is the total cash interest paid over the term to maturity?
Answer & Explanation
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