On May 1, 2018, ABC Corporation purchased $1,500,000 of 12% bonds, interest payable on January 1 and July 1, for $1,406,500 plus accrued interest. The bonds mature on January 1, 2024. Amortization is recorded when interest is received by the straight-line method (by months and round to the nearest dollar). (Assume bonds are available for sale.)
Instructions
Complete the Interest Revenue Received and Bond Amortization Schedule.
Date | Cash Received | Interest Revenue | Bod Discount Amortization |
Carrying Amount of Bonds |
1/1/18 | $1,406,500 | |||
7/1/18 |
||||
1/1/19 | ||||
7/1/19 | ||||
1/1/20 | ||||
7/1/20 | ||||
1/1/21 | ||||
7/1/21 | ||||
1/1/22 | ||||
7/1/22 | ||||
1/1/23 | ||||
7/1/23 | ||||
1/1/24 |
Date | Cash Received | Interest Revenue | Bod Discount Amortization | Carrying Amount of Bonds |
1/1/2018 | $1,406,500 | |||
7/1/2018 | $90,000 | $82,208 | $7,792 | $1,414,292 |
1/1/2019 | $90,000 | $97,792 | $7,792 | $1,422,083 |
7/1/2019 | $90,000 | $97,792 | $7,792 | $1,429,875 |
1/1/2020 | $90,000 | $97,792 | $7,792 | $1,437,667 |
7/1/2020 | $90,000 | $97,792 | $7,792 | $1,445,458 |
1/1/2021 | $90,000 | $97,792 | $7,792 | $1,453,250 |
7/1/2021 | $90,000 | $97,792 | $7,792 | $1,461,042 |
1/1/2022 | $90,000 | $97,792 | $7,792 | $1,468,833 |
7/1/2022 | $90,000 | $97,792 | $7,792 | $1,476,625 |
1/1/2023 | $90,000 | $97,792 | $7,792 | $1,484,417 |
7/1/2023 | $90,000 | $97,792 | $7,792 | $1,492,208 |
1/1/2024 | $90,000 | $97,792 | $7,792 | $1,500,000 |
Cash Received = $1,500,000 x 12% x 1/2 | ||||
Discount Amortization = ($1,500,000 - $1,406,500)/12 = $7,792 | ||||
Interest revenue = Cash Received - Discount amortized |
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