On January 1, 2016, a company issues 3-year bonds with a face value of $150,000

Question

On January 1, 2016, a company issues 3-year bonds with a face value of $150,000 and a stated interest rate of 7%. Because the market interest rate is 5%, the company receives $158,169 for the bonds. Required Fill in the table assuming the company uses effective-interest bond amortization. (Round your answers to the nearest whole dollar.) Table Carrying Value Period Interest Expense Amortized Premium Bonds Payable Premium on Bonds Payable Cash Paid Ended 01/01/2016 12/31/2016 12/31/2017 12/31/2018

Explanation / Answer

Period end Cash paid Interest expense Amortized premium Bonds payable Premium on Bonds payable Carrying value 1/1/2016 150000 8169 158169 12/31/2016 10500 7908 2592 150000 5577 155577 12/31/2017 10500 7779 2721 150000 2856 152856 12/31/2018 10500 7644 2856 150000 0 150000

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