Problem 14-2 (Part Level Submission) Larkspur Co. is building a new hockey arena
ID: 2546694 • Letter: P
Question
Problem 14-2 (Part Level Submission)
Larkspur Co. is building a new hockey arena at a cost of $2,730,000. It received a downpayment of $470,000 from local businesses to support the project, and now needs to borrow $2,260,000 to complete the project. It therefore decides to issue $2,260,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 10%.
Part B
Prepare a bond amortization schedule up to and including January 1, 2020, using the effective interest method.
CALCULATOR PRINTER VERSION BACK NEXT Y (b) Prepare a bond amortization schedule up to and including January 1, 2020, using the effective interest method. (Round answers to 0 decimal places, e.g. 38,548.) Carrying Premium Amount of Cash Paid Interest Expense Amortization Bonds Date 1/1/20 SHOW LIST OF ACCOUNT LINK TO TEXT LINK TO TEXT Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWERExplanation / Answer
Bond amortization schedule up to and including January 1, 2020, using the effective interest method is as prepared below:
A B C D Date Cash Paid Interest Expense Premium Amortization Carrying Amount of Note 2,260,000*11% D*10% A-B D-C 01-01-2016 2,398,867 01-01-2017 248,600 239,887 8,713 2,390,154 01-01-2018 248,600 239,015 9,585 2,380,569 01-01-2019 248,600 238,057 10,543 2,370,026 01-01-2020 248,600 237,003 11,597 2,358,429