Patrick Corporationissued 5% bonds on January 1, 2018, with a face amount of$1,000,000, the market rate for bonds of similar risk and maturitywas 4%. The bonds mature in 20 years and pay interest semiannually on June 30 and December 31.
Create an Excel spreadsheet toanswer the following requirements and submit a printout of yourExcel formulas as well as a handwritten copy of your solutions tothe requirements listed below.
Required:
- Determine the price of the bonds at January 1, 2018.
- Prepare the journal entry to record the issuance of the bondson January 1, 2018.
- Prepare a complete amortization schedule that determinesinterest at the effective rate each period using the format listedbelow:
Amortization Schedule
Date CashInterest Effective Interest Decrease in Balance Outstanding Balance
- Prepare the journal entry to record interest on June 30,2018.
- Prepare the appropriate journal entry when the bonds mature in20 years.
