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 bellow:
Payment
Cash Payment
Effective Interest
Increase in Balance
Outstanding
Balance
6,978,029
1
261,000
279,121
18,121
6,996,150
2
261,000
279,846
18,846
7,014,996
3
261,000
280,600
19,600
7,034,596
4
261,000
281,384
20,384
7,054,980
5
261,000
282,199
21,199
7,076,179
6
261,000
283,047
22,047
7,098,226
38
261,000
338,343
77,343
8,545,913
39
261,000
341,437
80,437
8,616,350
40
261,000
344,650
83,650
8,700,000
Required:
1. What is the face amount of the bonds?
2. What is the initial selling price of the bonds?
3. What is the term to maturity in years?
4. Interest is determined by what approach?
5. What is the stated annual interest rate?
6. What is the effective annual interest rate?
7. What is the total cash interest paid over the term to maturity?
8. What is the total effective interest expense recorded over the term to maturity?
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