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    Issue Price of Bonds, Amortization Schedule of Bonds

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    On January 1, 2008, Langly Co. issued ten-year bonds ith a face value of $1,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table value are:

    Present value of 1 for 10 periods at 10%...................0.386
    Present value of 1 for 10 periods at 12%...................0.322
    Present value of 1 for 20 periods at 5%...................0.377
    Present value of 1 for 20 periods at 10%...................0.312
    Present value of annuity for 10 periods at 10%.............6.145
    Present value of annuity for 10 periods at 12%.............5.650
    Present value of annuity for 20 periods at 5%............12.462
    Present value of annuity for 20 periods at 6%............11.470

    a. Calculate the issue price of the bonds.

    b. Without prejudice to your solution in part (a), assume that the issue price was $ 884,000. Prepare the amortization table for 2008, assuming that amortization is recorded on interest payment dates.

    Date Cash Expense Amortization Carryin Amount
    1/1/08
    6/30/08
    12/31/08

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    Solution Summary

    Calculates the issue price of the bonds and prepares the amortization schedule.

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