Question

Exercise 14-6

Indigo Company sells 10% bonds having a maturity value of $2,250,000 for $2,087,794. The bonds are dated January 1, 2017, and mature January 1, 2022. 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.)

Schedule of Discount Amortization Straight-Line Method
Year		Cash Paid		Interest Expense		Discount Amortized		Carrying Amount of Bonds
Jan. 1, 2017		$		$		$		$
Jan. 1, 2018
Jan. 1, 2019
Jan. 1, 2020
Jan. 1, 2021
Jan. 1, 2022

Answer 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		$		$		$		$2087794
Jan. 1, 2018		2250000*5% = 112500		144941		32441		2120235
Jan. 1, 2019		112500		144941		32441		2152676
Jan. 1, 2020		112500		144941		32441		2185117
Jan. 1, 2021		112500		144941		32441		2217558
Jan. 1, 2022		112500		144942		32442		2250000