Question: E10-10 Preparing a Bond Amortization Schedule for a Bond Issued at a Discount and Determining Reported Amounts LO10-4
Present Value of Annuity of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 1 2 3 4 5 6 0.99010 1.97040 2.94099 3.90197 4.85343 5.79548 6.72819 7.65168 8.56602 9.47130 0.98039 1.94156 2.88388 3.80773 4.71346 5.60143 6.47199 7.32548 8.16224 8.98259 0.97087 1.91347 2.82861 3.71710 4.57971 5.41719 6.23028 7.01969 7.78611 8.53020 0.96386 1.89287 2.78831 3.65138 4.48326 5.28507 6.05790 6.80280 7.52077 8.21279 0.96154 1.88609 2.77509 3.62990 4.45182 5.24214 6.00205 6.73274 7.43533 8.11090 0.95923 1.87936 2.76198 3.60861 4.42073 5.19974 5.94699 6.66378 7.35135 8.01089 0.95238 1.85941 2.72325 3.54595 4.32948 5.07569 5.78637 6.46321 7.10782 7.72173 0.94340 1.83339 2.67301 3.46511 4.21236 4.91732 5.58238 6.20979 6.80169 7.36009 0.93458 1.80802 2.62432 3.38721 4.10020 4.76654 5.38929 5.97130 6.51523 7.02358 7 8 9 10 Present Value of Annuity of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 11 12 13 14 9.25262 9.95400 10.63496 15 16 10.36763 11.25508 12.13374 13.00370 13.86505 14.71787 15.56225 16.39827 17.22601 18.04555 22.02316 25.80771 9.78685 10.57534 11.34837 12.10625 12.84926 13.57771 14.29187 14.99203 15.67846 16.35143 19.52346 22.39646 8.87979 9.52269 10.14236 10.73962 11.31530 11.87017 12.40498 12.92046 13.41731 13.89620 16.04320 17.82925 8.76048 9.38507 9.98565 10.56312 11.11839 11.65230 12.16567 12.65930 13.13394 13.59033 15.62208 17.29203 11.29607 11.93794 12.56110 13.16612 13.75351 14.32380 14.87747 17.41315 19.60044 8.64354 9.25039 9.83251 10.39090 10.92652 11.44031 11.93315 12.40590 12.85938 13.29437 15.21734 16.77902 8.30641 8.86325 9.39357 9.89864 10.37966 10.83777 11.27407 11.68959 12.08532 12.46221 14.09394 15.37245 7.88687 8.38384 8.85268 9.29498 9.71225 10.10590 10.47726 10.82760 11.15812 11.46992 12.78336 13.76483 7.49867 7.94269 8.35765 8.74547 9.10791 9.44665 9.76322 10.05909 10.33560 10.59401 11.65358 12.40904 17 18 19 20 25 30 Present Value of Annuity of $1 Periods 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 1 2 3 4 5 0.92593 1.78326 2.57710 3.31213 3.99271 4.62288 5.20637 5.74664 6.24689 6.71008 0.91743 1.75911 2.53129 3.23972 3.88965 4.48592 5.03295 5.53482 5.99525 6.41766 0.90909 1.73554 2.48685 3.16987 3.79079 4.35526 4.86842 5.33493 5.75902 6.14457 0.90090 1.71252 2.44371 3.10245 3.69590 4.23054 4.71220 5.14612 5.53705 5.88923 0.89286 1.69005 2.40183 3.03735 3.60478 4.11141 4.56376 4.96764 5.32825 5.65022 0.88496 1.66810 2.36115 2.97447 3.51723 3.99755 4.42261 4.79877 5.13166 5.42624 0.87719 1.64666 2.32163 2.91371 3.43308 3.88867 4.28830 4.63886 4.94637 5.21612 0.86957 1.62571 2.28323 2.85498 3.35216 3.78448 4.16042 4.48732 4.77158 5.01877 0.83333 1.52778 2.10648 2.58873 2.99061 3.32551 3.60459 3.83716 4.03097 4.19247 0.80000 1.44000 1.95200 2.36160 2.68928 2.95142 3.16114 3.32891 3.46313 3.57050 6 7 8 9 10 Present Value of Annuity of $1 Periods 9.0% 8.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 11 7.13896 6.80519 6.49506 6.20652 5.93770 5.68694 5.45273 5.23371 4.32706 3.65640 Future Value of Annuity of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 1 2 1.00000 2.03000 1.00000 2.04000 3.12160 3 1.00000 2.01000 3.03010 4.06040 5.10101 6.15202 3.09090 4.18363 4 4.24646 1.00000 2.02000 3.06040 4.12161 5.20404 6.30812 7.43428 8.58297 9.75463 10.94972 1.00000 2.03750 3.11391 4.23068 5.38933 6.59143 7.83861 9.13255 5 1.00000 2.04250 3.12931 4.26230 5.44345 6.67480 7.95848 9.29671 10.69182 12.14622 1.00000 2.05000 3.15250 4.31013 5.52563 6.80191 8.14201 9.54911 11.02656 12.57789 5.30914 6.46841 7.66246 8.89234 10.15911 11.46388 1.00000 2.06000 3.18360 4.37462 5.63709 6.97532 8.39384 9.89747 11.49132 13.18079 5.41632 6.63298 7.89829 9.21423 10.58280 12.00611 6 1.00000 2.07000 3.21490 4.43994 5.75074 7.15329 8.65402 10.25980 11.97799 13.81645 7 7.21354 8.28567 9.36853 10.46221 9 10.47503 11.86784 10 Future Value of Annuity of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 11 12 13 14 15 16 17 11.56683 12.68250 13.80933 14.94742 16.09690 17.25786 18.43044 19.61475 20.81090 22.01900 28.24320 34.78489 12.16872 13.41209 14.68033 15.97394 17.29342 18.63929 20.01207 21.41231 22.84056 24.29737 32.03030 40.56808 12.80780 14.19203 15.61779 17.08632 18.59891 20.15688 21.76159 23.41444 25.11687 13.31288 14.81212 16.36757 17.98135 19.65565 21.39274 23.19497 25.06478 27.00471 29.01739 40.27112 53.79924 13.48635 15.02581 16.62684 18.29191 20.02359 21.82453 23.69751 25.64541 27.67123 29.77808 41.64591 56.08494 13.66244 15.24309 16.89092 18.60879 20.39966 22.26665 24.21298 26.24203 28.35732 30.56250 43.07648 58.48553 14.20679 15.91713 17.71298 19.59863 21.57856 23.65749 25.84037 28.13238 30.53900 33.06595 47.72710 66.43885 14.97164 16.86994 18.88214 21.01507 23.27597 25.67253 28.21288 30.90565 33.75999 36.78559 54.86451 79.05819 15.78360 17.88845 20.14064 22.55049 25.12902 27.88805 30.84022 33.99903 37.37896 40.99549 63.24904 94.46079 18 19 20 25 26.87037 36.45926 47.57542 30 Future Value of Annuity of $1 Periods 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 1 1.00000 2 2.08000 3 3.24640 4 4.50611 5 5.86660 6 7.33593 7 8.92280 8 10.63663 9 12.48756 10 14.48656 Future Value of Annuity of $1 Periods 8.0% 1.00000 2.09000 3.27810 4.57313 5.98471 7.52333 9.20043 11.02847 13.02104 15.19293 1.00000 2 10000 3.31000 4.64100 6.10510 7.71561 9.48717 11.43589 13.57948 15.93742 1.00000 2.11000 3.34210 4.70973 6.22780 7.91286 9.78327 11.85943 14.16397 16.72201 1.00000 2.12000 3.37440 4.77933 6.35285 8.11519 10.08901 12.29969 14.77566 17.54874 1.00000 2.13000 3.40690 4.84980 6.48027 8.32271 10.40466 12.75726 15.41571 18.41975 1.00000 2.14000 3.43960 4.92114 6.61010 8.53552 10.73049 13.23276 16.08535 19.33730 1.00000 2.15000 3.47250 4.99337 6.74238 8.75374 11.06680 13.72682 16.78584 20.30372 1.00000 2.20000 3.64000 5.36800 7.44160 9.92992 12.91590 16.49908 20.79890 25.95868 1.00000 2.25000 3.81250 5.76563 8.20703 11.25879 15.07349 19.84186 25.80232 33.25290 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 11 16.64549 17.56029 18.53117 19.56143 20.65458 21.81432 23.04452 24.34928 32.15042 42.56613 Present Value of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 1 2 3 4 0.99010 0.98030 0.97059 0.96098 0.95147 0.94205 0.93272 0.92348 0.91434 0.90529 5 0.98039 0.96117 0.94232 0.92385 0.90573 0.88797 0.87056 0.85349 0.83676 0.82035 0.97087 0.94260 0.91514 0.88849 0.86261 0.83748 0.81309 0.78941 0.76642 0.74409 0.96386 0.92902 0.89544 0.86307 0.83188 0.80181 0.77283 0.74490 0.71797 0.69202 0.96154 0.92456 0.88900 0.85480 0.82193 0.79031 0.75992 0.73069 0.70259 0.67556 0.95238 0.90703 0.86384 0.82270 0.78353 0.74622 0.95923 0.92013 0.88262 0.84663 0.81212 0.77901 0.74725 0.71679 0.68757 0.65954 0.94340 0.89000 0.83962 0.79209 0.74726 0.70496 0.66506 0.62741 0.59190 0.55839 0.93458 0.87344 0.81630 0.76290 0.71299 0.66634 0.62275 0.58201 0.54393 0.50835 6 0.71068 8 9 0.67684 0.64461 0.61391 10 Present Value of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 11 12 13 14 15 0.89632 0.88745 0.87866 0.86996 0.86135 0.85282 0.84438 0.83602 0.82774 0.81954 0.77977 0.74192 16 0.80426 0.78849 0.77303 0.75788 0.74301 0.72845 0.71416 0.70016 0.68643 0.67297 0.60953 0.55207 0.72242 0.70138 0.68095 0.66112 0.64186 0.62317 0.60502 0.58739 0.57029 0.55368 0.47761 0.41199 0.66701 0.64290 0.61966 0.59726 0.57568 0.55487 0.53481 0.51548 0.49685 0.47889 0.39838 0.33140 0.64958 0.62460 0.60057 0.57748 0.55526 0.53391 0.51337 0.49363 0.63265 0.60686 0.58212 0.55839 0.53562 0.51379 0.49284 0.47275 0.45348 0.43499 0.35326 0.28689 0.58468 0.55684 0.53032 0.50507 0.48102 0.45811 0.43630 0.41552 0.39573 0.37689 0.29530 0.23138 0.52679 0.49697 0.46884 0.44230 0.41727 0.39365 0.37136 0.35034 0.33051 0.31180 0.23300 0.17411 0.47509 0.44401 0.41496 0.38782 0.36245 0.33873 0.31657 0.29586 0.27651 0.25842 0.18425 0.13137 17 18 0.47464 19 20 25 30 0.45639 0.37512 0.30832 Present Value of $1 Periods 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 1 2 3 4 5 0.89286 0.79719 0.71178 0.63552 0.92593 0.85734 0.79383 0.73503 0.68058 0.63017 0.58349 0.54027 0.50025 0.46319 0.91743 0.84168 0.77218 0.70843 0.64993 0.59627 0.54703 0.50187 0.46043 0.42241 0.90909 0.82645 0.75131 0.68301 0.62092 0.56447 0.51316 0.46651 0.42410 0.38554 0.90090 0.81162 0.73119 0.65873 0.59345 0.53464 0.48166 0.43393 0.39092 0.35218 0.88496 0.78315 0.69305 0.61332 0.54276 0.48032 0.42506 0.37616 0.33288 0.29459 0.87719 0.76947 0.67497 0.59208 0.51937 0.45559 0.39964 0.35056 0.30751 0.26974 0.56743 0.50663 0.45235 0.40388 0.36061 0.32197 0.86957 0.75614 0.65752 0.57175 0.49718 0.43233 0.37594 0.32690 0.28426 0.24718 0.83333 0.69444 0.57870 0.48225 0.40188 0.33490 0.27908 0.23257 0.19381 0.16151 0.80000 0.64000 0.51200 0.40960 0.32768 0.26214 0.20972 0.16777 0.13422 0.10737 6 7 8 9 10 Present Value of $1 Periods 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 11 0.42888 0.38753 0.35049 0.31728 0.28748 0.26070 0.23662 0.21494 0.13459 0.08590 Future Value of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 1 2 3 4 1.01000 1.02010 1.03030 1.04060 1.05101 1.06152 1.07214 1.08286 1.09369 1.10462 5 1.02000 1.04040 1.06121 1.08243 1.10408 1.12616 1.14869 1.17166 1.19509 1.21899 1.03000 1.06090 1.09273 1.12551 1.15927 1.19405 1.22987 1.26677 1.30477 1.34392 1.03750 1.07641 1.11677 1.15865 1.20210 1.24718 1.29395 1.34247 1.39281 1.44504 1.04000 1.08160 1.12486 1.16986 1.21665 1.26532 1.31593 1.36857 1.04250 1.08681 1.13300 1.18115 1.23135 1.28368 1.33824 1.39511 1.45440 1.51621 1.05000 1.10250 1.15763 1.21551 1.27628 1.34010 1.40710 1.47746 1.55133 1.62889 1.06000 1.12360 1.19102 1.26248 1.33823 1.41852 1.50363 1.59385 1.68948 1.79085 1.07000 1.14490 1.22504 1.31080 1.40255 1.50073 1.60578 1.71819 1.83846 1.96715 6 7 8 9 10 1.42331 1.48024 Future Value of $1 Periods 1.0% 2.0% 3.0% 3.75% 4.0% 4.25% 5.0% 6.0% 7.0% 11 2.10485 2.25219 12 13 1.89830 2.01220 2.13293 2.26090 2.39656 2.54035 14 15 1.11567 1.12683 1.13809 1.14947 1.16097 1.17258 1.18430 1.19615 1.20811 1.22019 1.28243 1.34785 16 1.24337 1.26824 1.29361 1.31948 1.34587 1.37279 1.40024 1.42825 1.45681 1.48595 1.64061 1.81136 1.49923 1.55545 1.61378 1.67430 1.73709 1.80223 1.86981 1.93993 2.01268 1.38423 1.42576 1.46853 1.51259 1.55797 1.60471 1.65285 1.70243 1.75351 1.80611 2.09378 2.42726 1.53945 1.60103 1.66507 1.73168 1.80094 1.87298 1.94790 2.02582 2.10685 2.19112 2.66584 3.24340 1.58065 1.64783 1.71786 1.79087 1.86699 1.94633 2.02905 2.11529 2.20519 2.29891 2.83075 3.48564 1.71034 1.79586 1.88565 1.97993 2.07893 2.18287 2.29202 2.40662 2.52695 2.65330 3.38635 4.32194 17 2.40985 2.57853 2.75903 2.95216 3.15882 3.37993 3.61653 3.86968 5.42743 7.61226 18 2.69277 2.85434 3.02560 3.20714 4.29187 19 20 2.08815 2.51017 25 30 3.01747 5.74349 Future Value of $1 Periods 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 1.10000 1 2 3 4 5 1.08000 1.16640 1.25971 1.36049 1.46933 1.58687 1.71382 1.85093 1.99900 2.15892 1.09000 1.18810 1.29503 1.41158 1.53862 1.67710 1.82804 1.99256 2.17189 2.36736 1.1 1000 1.23210 1.36763 1.51807 1.68506 1.87041 2.07616 2.30454 2.55804 2.83942 1.21000 1.33100 1.46410 1.61051 1.77156 1.94872 2.14359 2.35795 2.59374 1.12000 1.25440 1.40493 1.57352 1.76234 1.97382 2.21068 2.47596 2.77308 3.10585 1.13000 1.27690 1.44290 1.63047 1.84244 2.08195 2.35261 2.65844 3.00404 9457 1.14000 1.29960 1.48154 1.68896 1.92541 2.19497 2.50227 2.85259 3.25195 3.70722 1.15000 1.32250 1.52088 1.74901 2.01136 2.31306 2.66002 3.05902 3.51788 4.04556 1.20000 1.44000 1.72800 2.07360 2.48832 2.98598 3.58318 4.29982 5.15978 6.19174 1.25000 1.56250 1.95313 2.44141 3.05176 3.81470 4.76837 5.96046 7.45058 9.31323 6 7 8 9 Future Value of $1 Periods 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 20.0% 25.0% 11 2.33164 2.58043 2.85312 3.15176 3.47855 3.83586 4.22623 4.65239 7.43008 11.64153 E10-10 (Algo) Preparing a Bond Amortization Schedule for a Bond Issued at a Discount and Determining Reported Amounts LO10-4 On January 1 of this year, Ikuta Company issued a bond with a face value of $135,000 and a coupon rate of 7 percent. The bond matures in 3 years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 8 percent. Ikuta uses the effective-interest amortization method. (FV of $1, PV of $1, FVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your answers to whole dollars.) Required: 1. Complete a bond amortization schedule for all three years of the bond's life. Date Jan. 01, Year 1 Dec. 31, Year 1 Cash Interest Book Value of Amortization Interest Expense Bond $ 135,000 $ 9,450 $ 10,800 $ 1,350 $ 136,350 $ 9,450 $ 10,908 $ 1,458 $ 137,808 $ 9,450 $ 11,025$ 1,575 $ 139,383 Dec. 31, Year 2 Dec. 31, Year 3 2. What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2? December 31 Year 1 Year 2 $ 10,800 $ Interest expense Bonds payable 10,908 137,808 $ 136,350 $
