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Larkspur Company sells 8% bonds having a maturity value of $1,700,000 for $1,511,507. The bonds are dated January 1, 2017, and mature January 1, 2022.
Larkspur Company sells 8% bonds having a maturity value of $1,700,000 for $1,511,507. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1. The effective interest rate is 11%.
Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548.) Schedule of Discount Amortization Effective-Interest Method Cash Paid Interest Expense Discount Amortized Carrying Amount of Bonds Year Jan. 1, 2017 136,000 1,511,507 X Jan. 1, 2018 136,000 165510 29510 1541017 Jan. 1, 2019 T 136,000 168741 32741 1573758 Jan. 1, 2020 T 136,000 172327 36326 1610084 Jan. 1, 2021 136,000 176304 40304 1650389 Jan. 1, 2022 136,000 185610 49611 1,700,000Step by Step Solution
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