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On January 1, 2017, Lock Corporation issued $3,520,000 facevalue, 8%, 10-year bonds at $3,294,098. This...

On January 1, 2017, Lock Corporation issued $3,520,000 face value, 8%, 10-year bonds at $3,294,098. This price resulted in an effective-interest rate of 9% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1.

(6) Your answer is partially correct. Try again. Prepare an amortization table through December 31, 2019 (three interest peri


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Answer #1
LOCK CORPORATION
Bond Discount Amortization
Effective- Interest Method- Annual Interest Payments
Annual Interest Periods Interest to be Paid Interest Expense to be Recorded Discount Amortization Unamortized Discount Bond Carrying Value
Issue date $225902 $3294098
1 $281600 $296469 $14869 211033 3308967
2 281600 297807 16207 194826 3325174
3 281600 299266 17666 177160 3342839

Discount on bonds payable= $3520000-3294098= $225902

Unamortized Discount

Year 1= $225902-14869= $211033

Year 2= $211033-16207= $194826

Year 3= $194826-17666= $177160

c)

Date Account titles and explanation Debit Credit
December 31, 2017 Interest expense $296469
Cash $281600
Discount on bonds payable $14869
(To record accrual of interest and the amortization of discount)
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