Correct Answer:
Effective Interest Amortization Table |
|||||
Formula Used |
(110,000*9%) / 2 |
Last year’s Carrying value of bond* Market Rate of Interest (8%)/2 |
Interest Expense - Cash Paid |
Discount on bond (112,881 – 110,000) - Discount amortized |
Last year's Carrying value of Bond - current year's Premium amortized |
Date |
cash paid |
Interest Expense |
Discount Amortized |
unamortized discount |
Carrying value of Bond |
01-01-2019 |
- |
- |
$ 2,881 |
$ 1,12,881 |
|
06-30-2019 |
$ 4,950 |
$ 4,515 |
$ (435) |
$ 2,446 |
$ 1,12,446 |
12-31-2019 |
$ 4,950 |
$ 4,498 |
$ (452) |
$ 1,994 |
$ 1,11,994 |
06-30-2020 |
$ 4,950 |
$ 4,480 |
$ (470) |
$ 1,524 |
$ 1,11,524 |
12-31-2020 |
$ 4,950 |
$ 4,461 |
$ (489) |
$ 1,035 |
$ 1,11,035 |
End of answer.
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