On June 30, 2018, Singleton Computers issued 6% stated ratebonds with a face amount of $200 million. The bonds mature on June30, 2033 (15 years). The market rate of interest for similar bondissues was 5% (2.5% semiannual rate). Interest is paid semiannually(3%) on June 30 and December 31, beginning on December 31, 2018.(FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of$1) (Use appropriate factor(s) from the tables provided.) Required:1. Determine the price of the bonds on June 30, 2018. 2. Calculatethe interest expense Singleton reports in 2018 for these bondsusing the effective interest method.
Required 1
Determine the price of the bonds on June 30, 2018. (Enter youranswers in whole dollars. Round percentage answers to one decimalplace. Round your final answers to nearest whole dollaramount.)
|
| | Tablevalues are based on: | | n = | 30 | | | i = | 2.5% | | | Cash Flow | Amount | Present Value | | Interest | | | | Principal | | | | Price of bonds | |
|
Required 2
Calculate the interest expense Singleton reports in 2018 forthese bonds using the effective interest method. (Enter youranswers in whole dollars. Round your final answers to nearest wholedollar amount.)
|
| | Period-End | Cash Interest Paid | Bond Interest Expense | Premium Amortization | Carrying Value | | 06/30/2018 | | | | 12/31/2018 | | | $0 | 0 |
|
