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On January 1, 2018, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on...

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Accounting

On January 1, 2018, Tennessee Harvester Corporation issued debenture bonds that pay interest semiannually on June 30 and December 31. Portions of the bond amortization schedule appear below:

Payment Cash Payment Effective Interest Increase in Balance Outstanding Balance
5,774,920
1 216,000 230,997 14,997 5,789,917
2 216,000 231,597 15,597 5,805,514
3 216,000 232,221 16,221 5,821,735
4 216,000 232,869 16,869 5,838,604
5 216,000 233,544 17,544 5,856,148
6 216,000 234,246 18,246 5,874,394
~ ~ ~ ~ ~
~ ~ ~ ~ ~
~ ~ ~ ~ ~
38 216,000 280,008 64,008 7,064,202
39 216,000 282,568 66,568 7,130,770
40 216,000 285,230 69,230 7,200,000

Required: 1. What is the face amount of the bonds? 2. What is the initial selling price of the bonds? 3. What is the term to maturity in years? 4. Interest is determined by what approach? 5. What is the stated annual interest rate? 6. What is the effective annual interest rate? 7. What is the total cash interest paid over the term to maturity? 8. What is the total effective interest expense recorded over the term to maturity?

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