Wildhorse Company sells 8% bonds having a maturity value ot $1,350,000 for $1,15

Question

Wildhorse Company sells 8% bonds having a maturity value ot $1,350,000 for $1,155,347. The bonds are dated January 1, 2017, and mature January 1 2022. Interest is payable annually on January 1 Set up aschedule 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 Cash Paid Interest Expense Discount Amortized Carrying Amount of Bonds Year an. 1, 2017 Jen. 1, 2018 Jan. 1, 2019 Jan. 1, 2020 Jan. 1, 2021 Jan. 1, 2022

Explanation / Answer

Annual discount amortized =(1350000-1155347)/5= $38931 Year Cash paid Interest expense Discount amortized Carrying amount of bonds Jan. 1 ,2017 1155347 Jan. 1 ,2018 108000 146931 38931 1194278 Jan. 1 ,2019 108000 146931 38931 1233209 Jan. 1 ,2020 108000 146931 38931 1272140 Jan. 1 ,2021 108000 146931 38931 1311071 Jan. 1 ,2022 108000 146929 38929 1350000

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