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On June 30, 2016, Singleton Computers issued 8% stated rate bonds with a face amount...

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Accounting

On June 30, 2016, Singleton Computers issued 8% stated rate bonds with a face amount of $200 million. The bonds mature on June 30, 2031 (15 years). The market rate of interest for similar bond issues was 7% (3.5% semiannual rate). Interest is paid semiannually (4.0%) on June 30 and December 31, beginning on December 31, 2016. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

Required:
1.

Determine the price of the bonds on June 30, 2016.
Table values are based on:
n =
i =
Cash Flow Amount Present Value
Interest
Principal
Price of bonds

2.

Calculate the interest expense Singleton reports in 2016 for these bonds using the effective interest method.

Period-End Cash Interest Paid Bond Interest Expense Premium Amortization Carrying Value
06/30/2016
12/31/2016 $0 0

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