A Corporation sold an issue of 20-year bonds, having a total face value of 22M for 9,500,000. The bonds bear interest at 16%, payable semiannually. The company wishes to establish a sinking fund for retiring the bond issue and will make semiannual deposit that will earn 12%, compounded semiannually. Compute the annual cost for interest and redemption of these bonds.

4. Compute the annual cost for interest and redemption of these bonds

Thompson Distributors sold $50,000 worth of bonds to raise money for a new warehouse.                     The bonds pay interest annually at 4% for 10 years. The market rate of interest for a similar instrument                     was 3%; therefore, the bonds sold for a premium at $54,265.                                           a. Record the sale of the bonds.                                           b. Record the first interest payment and the amortization of the bond premium. Round the interest                     to the nearest dollar.                                           c. Determine the carrying value (book value) of the bonds after the first year.                                                 General Journal                 Date Account   Debit   Credit                                 a.                                                                                                             b.

Sepia Inc. issued $350,000 bonds that were redeemable in 7 years. They established a sinking fund that was earning 5.50% compounded semi-annually to pay back the principal of the bonds on maturity. Deposits were being made into the fund at the end of every 6 months. a. Calculate the size of the periodic sinking fund deposits. b. Calculate the sinking fund balance at the end of the 4th payment period. c. Calculate the amount of interest earned during the 5th payment period. d. Calculate the amount by which the sinking fund increased in the 5th payment period.