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
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.