3.Mazeltov Corporation issued $100,000 of 15-year, 8% bonds on January 1, 2006 The bonds pay interest annually and sold at 109.10% to yield 7%.
a.How much interest expense should Mazeltov recognize on the bonds for the year ended December 31, 2008?
b.What amount of net liability should Mazeltov report for the bonds on its December 31, 2009 balance sheet?
c.What amount of its 2010 payment will be interest?
4.Following is an amortization table for an issue of three-year bonds:
YearPresent value at
beginning of yearInterest
incurredAmount
paidAmortization
of principalValue at
end of year
1$105,154$ 8,412$10,000$1,588$103,566
2103,5668,28510,0001,715101,851
3101,8518,14810,0001,852100,000
Total24,84530,0005,155
Required:
Using spreadsheet format, record the entries that are necessary throughout the life of the bond.