Murray has made his decision and Lotus Coffee Inc. issued $60,000 of 5%, 3-year bonds on July 1, 2022. The bonds are dated July 1 and pay interest semi-annually on June 30 and December 31. The market interest rate was 4% for these bonds. Murray is surprised that the amount of cash Lotus will receive for the bonds will be different than $60,000. Why is this the case? How much cash will he be able to borrow? Murray thinks it would be very helpful if you could show him an effective-interest amortization table for the life of these bonds. Also, he asks you to record the issuance of the bonds and the December 31 payment. (Round all your calculations to the nearest dollar.)

Murray has made his decision and Lotus Coffee Inc. issued $60,000 of 5%, 3-year bonds on July 1, 2022. The bonds are dated July 1 and pay interest semi-annually on June 30 and December 31. The market interest rate was 4% for these bonds. Murray is surprised that the amount of cash Lotus will receive for the bonds will be different than $60,000. Why is this the case? How much cash will he be able to borrow? Murray thinks it would be very helpful if you could show him an effective-interest amortization table for the life of these bonds. Also, he asks you to record the issuance of the bonds and the December 31 payment. (Round all your calculations to the nearest dollar.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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