Math Problem Statement

Sandhill Corporation issued $340,000 of 5-year bonds on April 1, 2023. Interest is paid semi-annually on April 1 and October 1. Below is a partial amortization schedule for the first few years of the bond issue.

Semi-Annuall

Interest Period

Interest

Payment

Interest

Expense

Amortization

Carrying

Amount of Bonds

Apr.1, 2023

$355,678

Oct. 1, 2023

$6,800

$5,335

$1,465

354,213

Apr. 1, 2024

6,800

5,313

1,487

352,726

Oct. 1, 2024

6,800

5,291

1,509

351,217

Apr. 1, 2025

6.800

5,268

1,532

349,685

Oct. 1, 2025

6,800

5,245

1,555

348,130

Apr. 1, 2026

6,800

5,222

1,578

346,552 Total interest expense? 31674 is not the answer okay

Solution

To calculate the total interest expense for the given bond amortization schedule, you need to sum up all the "Interest Expense" amounts listed in each period.

Here are the steps:

  1. Interest Expense for October 1, 2023 = $5,335
  2. Interest Expense for April 1, 2024 = $5,313
  3. Interest Expense for October 1, 2024 = $5,291
  4. Interest Expense for April 1, 2025 = $5,268
  5. Interest Expense for October 1, 2025 = $5,245
  6. Interest Expense for April 1, 2026 = $5,222

Now, summing up these values:

5,335+5,313+5,291+5,268+5,245+5,222=31,6745,335 + 5,313 + 5,291 + 5,268 + 5,245 + 5,222 = 31,674

However, since you mentioned that 31,674 is not the correct answer, it seems we need to investigate further. This could indicate that part of the question is missing or misunderstood, or perhaps some interest amounts are omitted. You may want to confirm the periods or consider any other interest components over the remaining bond periods.

Would you like to go through further details or check the complete amortization? Here are 5 potential questions:

  1. Do we have the complete bond amortization schedule for all periods?
  2. Was the bond issued at a premium or discount, affecting the amortization method?
  3. Should we include additional adjustments for any missing interest payments?
  4. What was the method used to calculate the interest expense—effective interest method or straight-line method?
  5. Are there any other costs or bond-related fees not covered in this partial schedule?

Tip: When calculating bond interest expense using amortization, ensure the amortization schedule matches the method used (effective vs. straight-line) and covers the entire bond period.

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Math Problem Analysis

Mathematical Concepts

Finance
Bond Amortization
Interest Expense Calculation

Formulas

Interest Expense = Carrying Amount of Bonds * Market Interest Rate
Amortization = Interest Payment - Interest Expense

Theorems

Effective Interest Method

Suitable Grade Level

College Level (Finance/Accounting)