On January 1, 2024, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on...
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Accounting
On January 1, 2024, 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
4,893,518
1
280,000
293,611
13,611
4,907,129
2
280,000
294,428
14,428
4,921,557
3
280,000
295,293
15,293
4,936,850
4
280,000
296,211
16,211
4,953,061
5
280,000
297,184
17,184
4,970,245
6
280,000
298,215
18,215
4,988,460
~
~
~
~
~
~
~
~
~
~
~
~
~
~
~
38
280,000
397,547
117,547
6,743,328
39
280,000
404,600
124,600
6,867,928
40
280,000
412,072
132,072
7,000,000
Required:
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?
What is the total effective interest expense recorded over the term to maturity?
Answer & Explanation
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