Problem 14-2 (Part Level Submission) Oriole Co. is building a new hockey arena a

Question

Problem 14-2 (Part Level Submission)

Oriole Co. is building a new hockey arena at a cost of $2,310,000. It received a downpayment of $490,000 from local businesses to support the project, and now needs to borrow $1,820,000 to complete the project. It therefore decides to issue $1,820,000 of 12%, 10-year bonds. These bonds were issued on January 1, 2016, and pay interest annually on each January 1. The bonds yield 11%.

(b) Prepare a bond amortization schedule up to and including January 1, 2020, using the effective interest method. (Round answers to O decimal places, e.g. 38,548.) Cash Paid Interest Expense Premium Amortization Carrying Amount of Bonds Date 1/1/20

Explanation / Answer

Amount PV factor Present value Annual interest 218400 5.88923 1286207.83 Principal 1820000 0.35218 640967.60 Issue price 1927175 Cash paid Interest expense Premium amortization carrying amount 01-01-2016 1927175 01-01-2017 218400 211989 6411 1920764 01-01-2018 218400 211284 7116 1913648 01-01-2019 218400 210501 7899 1905749 01-01-2020 218400 209632 8768 1896981

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