On January 1, 2013, Piper Co. issued ten-year bonds with a face value of $4,000,000 and a stated interest rate of 10%, payable semiannually on June 30 and December 31. The bonds were sold to yield 12%. Table values are:
- Present value of 1 for 10 periods at 10% 386
- Present value of 1 for 10 periods at 12% 322
- Present value of 1 for 20 periods at 5% 377
- Present value of 1 for 20 periods at 6%312
- Present value of annuity for 10 periods at 10%6.145
- Present value of annuity for 10 periods at 12%5.650
- Present value of annuity for 20 periods at 5%12.462
- Present value of annuity for 20 periods at 6%11.470
(a) Calculate the issue price of the bonds.
(b) Without prejudice to your solution in part (a), assume that the issue price was $3,536,000. Prepare the amortization table for 2013, assuming that amortization is recorded on interest payment dates.