Question

Required information (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 $ 2,162 $ 1,967 $ 195 Date January 1, Year 1 End of Year 1 End of Year 2 End of Year 3 End of Year 4 Balance $ 46,831 46,636 46,433 ? 46,000 1,941 Required: 1. Complete the amortization schedule. (Enter all your values in positive. Round your final answers to nearest whole dollar amount.) Cash Interest Amortization Balance $ 46,831 $ 46,636 $ 46,433 $ 2,162 $ 1,967 $ Date January 1, Year 1 End of Year 1 End of Year 2 End of Year 3 End of Year 4 195 $ 212 $ 1,941 $ 46,000

Answer 1

1
Date	Cash	Interest	Amortization	Balance
Januray 1,Year 1				46831
End of Year 1	2162	1967	195	46636
End of Year 2	2162	1959	203	46433
End of Year 3	2162	1950	212	46221
End of Year 4	2162	1941	221	46000
2
Principal amount	46000
3
Cash received	46831
4
Premium	831
5
Cash disbursed per period	2162
Cash disbursed in total	8648	=2162*4
6
Coupon rate	4.7%	=2162/46000
7
Market rate of interest	4.2%	=1967/46831
8
	Interest expense
Year 2	1959
Year 3	1950
9
	Bonds payable
Year 2	46433
Year 3	46221