Question
Using effective interest amortization, complete the following bond amortization table (a-g). The bond was issued at $192,000 on January 1 and has a face value
Using effective interest amortization, complete the following bond amortization table (a-g). The bond was issued at $192,000 on January 1 and has a face value of $200,000, contract interest rate of 9%, and interest is paid semi-annually on 6/30 and 12/31 for 20 years. The market interest rate is 10%
interest paid | interest expense | amortization | unamortized balance | bond carrying amount | |
1/1/14 | a) 8000 | b) 192,000 | |||
6/30/14 | c) 900 | d) 9600 | e) 600 | f) 7400 | g) 192,600 |
based on the amortization table, prepare the following journal entries:
a. The January 1, 2014 issuing bonds.
b. On Jyne 30, 2014 for the payment of interest and amortization of the discount premium using effective interest amortization method.
c) One June 30, 2014 for the payment of interest and amortization of the discount/premium using the straight-line amortization method.
a. Cash 192,000
discount 8,000
bonds payable 200,000
b. Interest Expense 9,600
Discount 600
Cash 9,000
c. Interest Expense 9,200
Discount 200 (8,000/40)
Cash 9,000
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