Junque Bondz, Inc. issued 15-year bonds with a face value of ...

[Collmarie]

Junque Bondz, Inc. issued 15-year bonds with a face value of 50,000. The bonds carry a 7 stated interest rate and pay interest once a year. They were issued when the market interest rate was 8 and sold for 45,720.18.
 
  Required:
  a. Complete the amortization schedule for the first two years of the bond issue using the effective interest method.
 
   Beginning carrying value Cash payment Interest expense Amortization of discount Ending carrying value
  Year 1 45,720.18
  Year 2
 
  b. Put an X in the appropriate box to describe how each of these items will behave with each additional interest payment:
 
   Increase Decrease Remain the same
  1 Cash payment for interest
  2 Interest expense
  3 Bond carrying value
 
  c. Fill in the correct dollar amounts:
  At maturity, after the last interest payment has been made, the unamortized discount on the bonds will be ______________ and the carrying value of the bonds will be _______________.

Question 2

The process whereby lost data is restored and operations are continued is called ___________________ ___________.
 Fill in the blank(s) with correct word

[orangecrush]

Answer to Question 1

a.
Beginning carrying value Cash payment Interest expense Amortization of discount Ending carrying value
Year 1 45,720.18 3,500
50,000 x .07 3,657.61
45,720.18 x .08 157.61
3,500 - 3,637.61 45,877.79
45,720.18 + 157.61
Year 2 45,877.79
Same as Year 1 End 3,500
50,000 x .07 3,670.22
45,877.79 x .08 170.22
3,500 - 3,670.22 46,048.01
45,877.79 + 170.22

b.
Increase Decrease Remain the same
1 Cash payment for interest X
2 Interest expense X
3 Bond carrying value X

c. 0; 50,000

Answer to Question 2

recovery

[Collmarie]

Correct answers!

[orangecrush]

Great! Please up vote