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Bond price, discount, amortization schedule & journal entries

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For working capital your company has issued $1,500,000 in new bonds. The bonds have a stated 10% coupon rate with 5 annual interest payments of $150,000 due at the end of each year. At the time of issuance they were discounted to yield 12% to the investors, and your company will receive this discounted amount in cash.

(a) Calculate amounts for the new debt issuance and complete the amortization schedule.

(b) Complete the journal entries for the new debt issuance and first interest payment.

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Solution Summary

Your tutorial is attached in excel and guides you through computing the bond price, the amortization schedule and the first two journal entries. Click in cells to see computations.

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