Question

14) Presented here is a partial amortization schedule for Roseland Company who sold $200,000, five year 10% bonds on January 1, 2012 for $212,000 and uses annual straight-line amortization. Interest Period 1 Interest Paid BOND AMORTIZATION SCHEDULE Interest Premium Unamortized Expense Amortization Premium $12,000 (ii) (iii) (iv) Bond Carrying Value $212,000 (V) January 1, 2012 January 1, 2013 (i) Which of the following amounts should be shown in cell (iv)? A) $ 10,800 B) $ 7,200 C) $ 14,400 (wrong) D) $ 9,600 15) Presented here is a partial amortization schedule for Roseland Company who sold $200,000, five year 10% bonds on January 1, 2012 for $208,000 and uses annual straight-line amortization. Interest Period Interest Paid BOND AMORTIZATION SCHEDULE Interest Premium Unamortized Expense Amortization Premium $8,000 (ii) (iii) (iv) Bond Carrying Value $208,000 V January 1, 2012 January 1, 2013 (1) L Which of the following amounts should be shown in cell (v)? A) $ 209,600 B) $ 208,800 (wrong) C) $ 206,400 R$ 297 2001

Answer 1

14) Premium = 212000-200000 = 12000

Annual amortization = 12000/5 = 2400

iv) Unamortized premium = 12000-2400 = 9600

So answer is d) $9600

15) Annual amortization = (208000-200000)/5 = 1600

V) 208000-1600 = 206400

So answer is c) $206400