Question
Sarasota Company sells 8% bonds having a maturity value of $1,550,000 for $1,432,484. The bonds are dated January 1, 2020, and mature January 1, 2025.
Sarasota Company sells 8% bonds having a maturity value of $1,550,000 for $1,432,484. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1.
Determine the effective-interest rate. (Round answer to 0 decimal places, e.g. 18%.)
The effective-interest rate | % |
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Set up a schedule of interest expense and discount amortization under the effective-interest method. (Round intermediate calculations to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g. 38,548.)
Schedule of Discount Amortization Effective-Interest Method | ||||||||
Year | Interest Payable | Interest Expense | Discount Amortized | Carrying Amount of Bonds | ||||
Jan. 1, 2020 | $ | $ | $ | $ | ||||
Dec. 31, 2020 | ||||||||
Dec. 31, 2021 | ||||||||
Dec. 31, 2022 | ||||||||
Dec. 31, 2023 | ||||||||
Dec. 31, 2024 |
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