Question

On January 1, 2021, White Water issues $460,000 of 5% bonds, due in 15 years, with interest payable annually on December 31 each year.

Assuming the market interest rate on the issue date is 6%, the bonds will issue at $415,326.

Required:

1. Complete the first three rows of an amortization schedule. (Round your final answers to the nearest whole dollar.)

	Date Cash Paid Interest Expense Increase in Carrying Value Carrying Value 01/01/2021 12/31/2021 12/31/2022

Answer 1

Date	Cash Paid	Interest expense	Increase in Carrying Value	Carrying value
01/01/2021				415326
12/31/2021	23000	24920	1920	417246
12/31/2022	23000	25035	2035	419281
Workings:
Cash paid	23000	=460000*5%
Interest expense:
12/31/2021	24920	=415326*6%
12/31/2022	25035	=417246*6%