Hondor Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, 2012. The stated interest rate was payable at the end of each year. The bonds mature at the end of four years. The following schedule has been completed (amounts in thousands):

Required:
1. Complete the amortization schedule.
2. What was the maturity amount (face value) of the bonds?
3. How much cash was received at date of issuance (sale) of the bonds?
4. Was there a premium or a discount? If so, which and how much was it?
5. How much cash is paid for interest each period and will be paid in total for the full life of the bond issue?
6. What is the stated interest rate? value of the bond.
7. What is the market interest rate?
8. What amount of interest expense should be reported on the income statement each year?
9. Show how the bonds should be reported on the balance sheet at the end of 2012 and 2013.

Transcribed Image Text:

Date Cash Interest Amortization Balance January 1, 2012 End of year 2012 End of year 2013 End of year 2014 End of year 2015 $450 450 450 450 $6,101 6,078 6,054 $427 426 $23 24 28 6,000