COMPLETING A DEBT AMORTIZATION TABLE (STRAIGHT LINE)

Cagney Company sold $200,000 of bonds on December 31, 2008. A portion of the amortization table appears below.

Period Cash Payment

(Credit)

Interest Expense

(Debit)

Discount on Bonds Payable

(Credit)

Discount on Bonds Payable Balance Carrying Value At issue $6,000 $194,000 6/30/09 $11,000 $11,600 $600 5,400 194,600 12/31/09 11,000 11,600 600 4,800 195,200 6/30/10 ? ? ? ? ?

Required:

. Determine the stated interest rate on these bonds.

. Calculate the interest expense and the discount amortization for the interest period ending June 30, 2010.

. Calculate the liability balance shown on a balance sheet after the interest payment is recorded on June 30, 2010.

Exercise