Metlock Company sells 10% bonds having a maturity value of $1,410,000 for $1,308,350. The bonds are dated January 1, 2020, and mature January 1, 2025. Interest is payable annually on January 1.
Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to 0 decimal places, e.g. 38,548.)
Solution
Schedule of Discount Amortization | ||||
Straight-Line Method | ||||
Year | Cash Paid | Interest expense | Discount Amortized | Carrying Amount of Bonds |
Jan 1, 2020 | $ 1,308,350 | |||
Jan 1, 2021 | $ 141,000 | $ 161,330 | $ 20,330 | $ 1,328,680 |
Jan 1, 2022 | $ 141,000 | $ 161,330 | $ 20,330 | $ 1,349,010 |
Jan 1, 2023 | $ 141,000 | $ 161,330 | $ 20,330 | $ 1,369,340 |
Jan 1, 2024 | $ 141,000 | $ 161,330 | $ 20,330 | $ 1,389,670 |
Jan 1, 2025 | $ 141,000 | $ 161,330 | $ 20,330 | $ 1,410,000 |
Working
Bond issue price | $ 1,308,350 |
Face value | $ 1,410,000 |
Discount on bonds payable | $ 101,650 |
Number of Interest payments | 5 |
Discount/ premium to be amortized per year | $ 20,330 |
Metlock Company sells 10% bonds having a maturity value of $1,410,000 for $1,308,350. The bonds are...
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Riverbed Company sells 10% bonds having a maturity value of
$2,550,000 for $2,366,166. The bonds are dated January 1, 2017, and
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1.
Set up a schedule of interest expense and discount amortization
under the straight-line method. (Round answers to 0
decimal places, e.g. 38,548.)
Schedule of Discount Amortization
Straight-Line Method
Year
Cash
Paid
Interest
Expense
Discount
Amortized
Carrying
Amount of Bonds
Jan. 1, 2017
$
$
$
$
Jan. 1,...
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1.
Determine the effective-interest rate. (Round
answer to 0 decimal places, e.g. 18%.)
The effective-interest rate
%
Set up a schedule of interest expense and discount amortization
under the effective-interest method. (Round
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Exercise 14-07
Pronghorn Company sells 8% bonds having a maturity value of
$2,000,000 for $1,848,366. The bonds are dated January 1, 2020, and
mature January 1, 2025. Interest is payable annually on January
1.
Determine the effective-interest rate. (Round
answer to 0 decimal places, e.g. 18%.)
The effective-interest rate
%
Set up a schedule of interest expense and discount amortization
under the effective-interest method. (Round
intermediate calculations to 5 decimal places, e.g. 1.25124 and
final answer to 0 decimal places,...