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Wheaton Wholesalers Ltd. was authorized to issue $500,000 of face value bonds, as follows:
|
Date of authorization |
Term |
Interest rate |
Interest payment dates |
|
January 1, 2015 |
3 years |
12% |
Semi-annually on June 30 and December 31 |
On January 1, 2015, the corporation issued $200,000 of face value bonds for $210,152.
Required:
- Calculate
- The amount of interest paid every interest payment date.
- The amount of amortization to be recorded at each interest payment date (use the straight-line method of amortization).
- Prepare an amortization table showing beginning and ending bond carrying amounts over the three years.
- Calculate the actual interest rate under the straight-line method of amortization for each six-month period.
- Comment on the interest rate that results in each period. Do you think that this should vary from period to period? Why or why not?
- 1021 reads
