Question
MacBride Enterprises sold $200,000 of bonds on December 31, 2018. A portion of the amortization table appears below. Period Cash Payment (Credit) Interest Expense (Debit)
MacBride Enterprises sold $200,000 of bonds on December 31, 2018. A portion of the amortization table appears below.
| Period | Cash Payment (Credit) | Interest Expense (Debit) | Premium on Bonds Payable (Debit) | Premium on Bonds Payable Balance (Credit) | Bond Payable Carrying Value (Credit) | |||||
| At issue | $6,457 | $206,457 | ||||||||
| 06/30/19 | $9,000 | $8,465 | $535 | 5,922 | 205,922 | |||||
| 12/31/19 | 9,000 | 8,443 | 557 | 5,365 | 205,365 | |||||
| 06/30/20 | 9,000 | 8,420 | 580 | 4,785 | 204,785 | |||||
| 12/31/20 | ? | ? | ? | ? | ? | |||||
Required:
1. Indicate the stated annual interest rate on these bonds. %
2. Calculate the effective annual interest rate on these bonds. (Note: Round to the nearest 0.1%.) %
3. Determine the interest expense and premium amortization for the interest period ending December 31, 2020. (Note: Round to the nearest dollar.)
| Period | Cash Payment (Credit) | Interest Expense (Debit) | Premium on Bonds Payable (Debit) | Premium on Bonds Payable Balance (Credit) | Bond Payable Carrying Value (Credit) | ||||||||||||||||||||
| At issue | $6,457 | $206,457 | |||||||||||||||||||||||
| 6/30/19 | $9,000 | $8,465 | $535 | 5,922 | 205,922 | ||||||||||||||||||||
| 12/31/19 | 9,000 | 8,443 | 557 | 5,365 | 205,365 | ||||||||||||||||||||
| 6/30/20 | 9,000 | 8,420 | 580 | 4,785 | 204,785 | ||||||||||||||||||||
| 12/31/20 | |||||||||||||||||||||||||
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Cost Accounting An Introduction To Cost Management Systems
Authors: Philip Jagolinzer
1st Edition
0324015828, 978-0324015829
