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Amortization Schedule for bond interest and amortization

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.

Instructions:

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

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Solution Preview

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 ...

Solution Summary

The solution explains how to prepare an amortization Schedule for bond interest and discount amortization.

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