Question

On January 1, when the market interest rate was 9 percent, Seton Corporation completed a $230,000, 8 percent bond issue for $215,238. The bonds pay interest each December 31 and mature in 10 years. Assume Seton Corporation uses the effective-interest method to amortize the bond discount.

rev: 04_29_2019_QC_CS-166541

3. Prepare a bond discount amortization schedule for these bonds. (Do not round intermediate calculations. Round your answers to the nearest dollar.)

Answer 1

Solution 3:

Bond Amortization Schedule
Year	Cash Paid	Interest Expense	Discoount Amortized	Unamortized Discount	Carrying Value
Issue Date				$14,762	$215,238
1	$18,400	$19,371	$971	$13,791	$216,209
2	$18,400	$19,459	$1,059	$12,732	$217,268
3	$18,400	$19,554	$1,154	$11,578	$218,422
4	$18,400	$19,658	$1,258	$10,320	$219,680
5	$18,400	$19,771	$1,371	$8,948	$221,052
6	$18,400	$19,895	$1,495	$7,454	$222,546
7	$18,400	$20,029	$1,629	$5,825	$224,175
8	$18,400	$20,176	$1,776	$4,049	$225,951
9	$18,400	$20,336	$1,936	$2,113	$227,887
10	$18,400	$20,513	$2,113	$0	$230,000