Question

Effective Interest Amortization On December 31, Caper, Inc., issued $250,000 of eight percent, ten-year bonds for $218,844, yielding an effective interest rate of ten percent. Semiannual interest is payable on June 30 and December 31 each year. The firm uses the effective interest method to amortize the discount. Required Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar. Balance Book Value Perlodic of Unamortized of Bonds Interest Interest Interest Period Amortization End of Perlod Year Paid Expense Discount 218,844 at issue 0 $ 0 $ 0 $ 31,156$ 1 $ 1 10,942 942 30,214 219,786 220,775 2 10,989 989 29,225

Answer 1

Amortization Sechedule Book Balance of Valu of interest Interest Periodic unamortized the Year Periods interest Paid Expenses Amotization Discount Bond at Issue o 01 31156 218844 10000 10942 942 30214 219786 2 10000 10989 989 31203 220775 Interet Paid=250000*8%*6/12 interest Expenses = 218844*10%*6/12 219786*10%*6/12 10000 10942 10989