Exercise 10-20A Effective interest amortization of a bond discount LO 10-6

On January 1, Year 1, Parker Company issued bonds with a face value of $83,000, a stated rate of interest of 14 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 16 percent at the time the bonds were issued. The bonds sold for $77,565. Parker used the effective interest rate method to amortize the bond discount. (Round your intermediate calculations and final answers to the nearest whole dollar amount.) Required a. Prepare an amortization table.

b. What is the carrying value that would appear on the Year 4 balance sheet?
c. What is the interest expense that would appear on the Year 4 income statement?
d. What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows?

Required a. Prepare an amortization table. Book Date Cash Payment Hint Interest Expense Discount Amortization Carrying Value 77,565 11,620 12,410 790 78,355 January 1, Year 1 December 31, Year 1 December 31, Year 2 December 31, Year 3 December 31, Year 4 December 31, Year 5 Totals + b. Carrying value c. Interest expense d. Cash outflow for interest