Devon Harris Company sells 10% bonds having a maturity value of $2,000,000 for $1,855,816. The bonds are dated January 1, 2007, and mature January 1, 2012. Interest payable annually on January 1.
Set up a schedule of interest expense and discount amoritzation under the effective interest method (Hint: the effective interest rate must be computed). Remit in excel© BrainMass Inc. brainmass.com June 3, 2020, 9:47 pm ad1c9bdddf
Please see the attached file
We first calculate the effective rate using the RATE function in excel
Issue Price 1,855,816
Maturity 5 years
Annual Interest 200,000
Par Value 2,000,000
Effective interest rate 12%
The effective ...
The solution explains how to prepare an amortization Schedule for bond interest and discount amortization.