[sgreen29]

Dell Co. issues bonds dated January 1, 2009, with a par value of $971,670. The bonds' annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $991,500.

1) How much total bond interest expense will be recognized over the life of these bonds?
2) Prepare an amortization table like the one in Exhibit 10.11 for these bonds; use the straight-line method to amortize the premium.

[blahp]

Answer:

971670x13%x3

378951.3 (round to the nearest whole dollar)

378951-19830(premium)= 359121

to get to the premium amount subtract the amount paid from the par value

991500-971670= 19830

If the bond was issued @ discount you would add the discount amount instead.

Hope this helped some :)