Question

On January 1, 2020, Concord Company purchased 10% bonds having a maturity value of $220,000, for $237,567.22. The bonds provide the bondholders with a 8% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Concord Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. Prepare a bond amortization schedule

Answer 1

Concord Corp Schedule of Bond Premium Amortization Calculation Interest periods Interest to be paid Interest expense Premium amortization Unamortized Premium Bond Carrying Value Interest to be paid Interest expense Premium amortization Unamortized Premium Bond Carrying Value 10% 8% 1-Jan-20 17,567.22 237,567.22 =237,567.22-220,000 1-Jan-21 22,000.00 19,005.38 2,994.62 14,572.60 234,572.60 =220,000 * 10% =237,567.22*8% =22,000-19,005.38 =17,567.22-2,994.62 =220,000+14,572.60 1-Jan-22 22,000.00 18,765.81 3,234.19 11,338.41 231,338.41 =220,000 * 10% =234,572.60*8% -22,000-18,765.81 =14,572.60-3,234.19 =220,000+11,338.41 1-Jan-23 22,000.00 18,507.07 3,492.93 7,845.48 227,845.48 1-Jan-24 22,000.00 18,227.64 3,772.36 4,073.12 224,073.12 1-Jan-25 22,000.00 17,926.88 4,073.12 (0.00) 220,000.00 Face value*10% Carrying value*8% Int to be paid less int exp Face value less Unamortized Premium