Question

Required information P10-10 Preparing a Bond Amortization Schedule for a Bond Issued at a Premium LO10-5 [The following information applies to the questions displayed below.] On January 1 of this year, Olive Corporation issued bonds. Interest is payable once a year on December 31. The bonds mature at the end of four years. Olive uses the effective-interest amortization method. The partially completed amortization schedule below pertains to the bonds: Cash Interest Amortization $ 1,980 $1,792 Date January 1, Year 1 End of Year 1 End of Year 2 End of Year 3 End of Year 4 $ 188 Balance $ 44,799 44,611 44,415 7 44,000 203 1,768

Answer 1

Correct Answer:

Effective Interest Amortization Table
Date	cash paid	Interest Expense	Discount Amortized	Carrying value of Bond
January 1, year 1		-	-	$ 44,799
End of year 1	$ 1,980.0	$             1,792	$ 188	$ 44,611
End of year 2	$ 1,980.0	$             1,784	$ 196	$ 44,415
End of year 3	$ 1,980.0	$             1,777	$ 203	$ 44,212
End of year 4	$ 1,980.0	$             1,768	$ 212	$ 44,000

End of answer.

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