- On December 31 2020 Sierra Corp Issues 4 Percent 10 Year Convertible Bonds With A Maturity Value Of 4 500 000 The 1 (198.16 KiB) Viewed 3 times
On December 31, 2020, Sierra Corp. issues 4 percent, 10-year convertible bonds with a maturity value of $4,500,000. The semi-annual interest dates are June 30 and December 31. The market interest rate is 5 percent, and the issue price of the bonds is 92.2054. Sierra Corp. amortizes bond premium and discount by the effective interest method. Required Requirement 1. Prepare an effective-interest method amortization table for the first four semi-annual interest periods. (Round your answers to the nearest dollar.) Semi-annual Interest Period Dec 31, 2020 A Interest Payment (2.0% of Maturity Values) B Sierra Corp. Amortization Table C Interest Expense (2.5% of Preceding Bond Carrying Amount) Discount Amortization (B-A) D Unamortized Discount Account Balance (D-C) E Bond Carrying Amount ($4,500,000 - D)