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Winter
Ltd. is authorized to issue
$2,500,000
of
4%,
10-year
bonds payable. On December 31,
2018,
when the market interest rate is
5%,
the company issues
$2,000,000
of the bonds.
Winter
amortizes bond discount using the effective-interest method. The semiannual interest dates are June 30 and December 31.
Requirements
| 1. | Use the PV function in Excel to calculate the issue price of the bonds. |
| 2. | Prepare a bond amortization table for the first year of the bonds. |
| 3. | Record the issuance of the bonds payable on December 31, 2018; the first semiannual interest payment on June 30, 2019; and the second payment on December 31, 2019. |
Answer & Explanation
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