Question

On January 1, 2020, Bridgeport Company purchased 12% bonds having a maturity value of $270,000, for $290,470.00. The bonds provide the bondholders with a 10% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Bridgeport 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. (Round answers to 2 decimal places, e.g. 2,525.25.)

Schedule of Interest Revenue and Bond Premium Amortization Effective-Interest Method
Date		Cash Received		Interest Revenue		Premium Amortized		Carrying Amount of Bonds
1/1/20		$		$		$		$
1/1/21
1/1/22
1/1/23
1/1/24
1/1/25

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2020. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2020

Prepare the journal entry to record the interest revenue and the amortization at December 31, 2021. (Round answers to 2 decimal places, e.g. 2,525.25. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31, 2021

Answer 1

Worknig Notes:
		Par Value of the Bonds (A) =	$                       2,70,000
		Issued price	$                       2,90,470
		Premium issued	$                           20,470
		Coupon Rate (B) =	12%
		Coupon amount (AXB)	$                           32,400
SOLUTION 1
	Schedule of Interest revenue and bond premium Amortization
	Effective interest Method
	Date	Cash Paid	Interest @ 10 % on Carrying amount	Premium Amortized	Caryying Amount
	01/01/2020				$         2,90,470
	01/01/2021	$                                                                                               32,400	$                     29,047.00	$             3,353.00	$         2,87,117
	01/01/2022	$                                                                                               32,400	$                     28,711.70	$             3,688.30	$         2,83,429
	01/01/2023	$                                                                                               32,400	$                     28,342.87	$             4,057.13	$         2,79,372
	01/01/2024	$                                                                                               32,400	$                     27,937.16	$             4,462.84	$         2,74,909
	01/01/2025	$                                                                                               32,400	$                     27,490.87	$             4,909.13	$         2,70,000
SOLUTION 2
	Journal Entries
	Date	Account Title and explanation	Debit	Credit
	Dec 31, 2020	Interest Revenue	$                           29,047
		Premium on Bonds Purchase	$                             3,353
		Interest Receivable		$                32,400
		(To Record the interest receivable for dec 31 2020)
SOLUTION 3:
	Journal Entries
	Date	Account Title and explanation	Debit	Credit
	Dec 31, 2021	Interest Revenue	$                     28,711.70
		Premium on Bonds Purchase	$                       3,688.30
		Interest Receivable		$          32,400.00
		(To Record the interest receivable for dec 31 2021)