Sawyer corporation issued 200000000 face value bonds on 1st

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Reference no: EM13352085

Sawyer Corporation issued $200,000,000 face value bonds on 1^st July, 2013. The bonds are a 20 year issue and carry a coupon (face) rate of 4 percent. The bonds were issued when rates in the open market were 6%. Interest is paid semi-annually.

a. Purpose the entry to record the issuance of the bonds on Sawyer's books.

b. The bond indenture agreement needs that Sawyer deposit money in a bond sinking fund semiannually starting with the first interest payment date of 1^st January, 2014 and ending on the last interest payment date. The controller evaluates that the annual rate of interest earned on the investments in the sinking fund will be 6 percent. What amount must be deposited semiannually in order to have sufficient money in the fund to pay off the bonds in 20 years?

Reference no: EM13352085

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