Exercise 9-56 (Algorithmic) Using a Discount Amortization Table (Straight Line) Panamint Candy Company prepared the following amortization table for $500,000 of five year, 9.2 percent bonds issued and sold by Panamint on December 31, 2012, for $445,000 Cash Interest Discount Discount Carrying Period Payment Expense on Bonds on Bonds Value (Credit) (Debit) Payable Payable (Credit) Balance 57.000 442 $23,000 23,000 23,000 23,000 23,000 6/30/13 12/31/13 6/30/14 12/31/14 6/30/15 12/31/15 6/30/16 12/31/16 6/30/17 12/31/17 $28,700 28,700 28,700 28,700 28.700 28,700 20,700 20,700 28,700 28.700 $5,700 5,700 5,700 5,700 5,700 5,700 5,700 5,700 5,700 5,700 $1,300 45,600 39,900 34,200 28,500 22,800 17,100 11,400 5,700 0 448,700 454,400 460,100 465,800 471,500 477,200 482,900 488,600 494,300 500.000 23,000 23,000 23,000 23,000 1. Prepare the entry to recognize the sale of the bonds on December 31, 2012. If an amount box does not require an entry, leave it blank 2012 Dec. 31 Journal Account and Explanation Debit Credit (Cash Discount on Bonds Payable - Bonds Payable Record issuance of bonds at discount 2. Prepare the entry to recognize the first interest payment on June 30, 2013. If an amount box does not require an entry, leave it blank. 2013 June 30 Interest Expense (Cash Onscount on Blonds Payable Record interest expense Hide Feedback Partially Correct Check My Work Feedback Determine interest, principal rate x time. Payments twice a year, every six months. The discount is amortized over the life of the bond and with every int interest expense is increased by the amortized discount amount. Cash payment equals the interest expense less the amortized discount 3. Determine the interest expense for these bonds that Panamint will report on its 2015 Income statement 4. Indicate how these bonds will appear in Panamint's December 31, 2016, balance sheet. Panamint Candy Company Balance Sheet (partial) For the Year Ended December 31, 2016 Bonds payable: 9.2% Bonds, due 2017 9.2% Bonds, due 2017 - Less: Discount on bonds payab Exercise 9-54 (Algorithmic) Completing a Debt Amortization Table (Straight Line) Cagney Company sold $244,000 of bonds on December 31, 2011. A portion of the amortization table appears below. Period Cash Payment (Credit) Interest Expense (Debit) Carrying Value Discount on Bonds Payable (Credit) Discount on Bonds Payable Balance $8,000 At issue $236,000 $236,800 $12,000 $12,800 6/30/12 12/31/12 6/30/13 $800 800 6,400 237,600 1. Determine the stated interest rate on these bonds. Round your answer to the nearest whole. 10 % 2. Calculate the interest expense and the discount amortization for the interest period ending June 30, 2013. Interest expense 12800 Discount amortization 800 3. Calculate the liability balance shown on a balance sheet after the interest payment is recorded on June 30, 2013. $ 2446003
