Exercise 10-20: Azen Corporation issued $412,000, 7%, 24-year bonds on January 1
ID: 2453357 • Letter: E
Question
Exercise 10-20: Azen Corporation issued $412,000, 7%, 24-year bonds on January 1, 2012, for $332,015. This price resulted in an effective-interest rate of 9% on the bonds. Interest is payable annually on January 1. Azen uses the effective-interest method to amortize bond premium or discount.
(I would like to see how this was worked out please as I cannot find a sample on my book, thnak you.)
Prepare the schedule using effective-interest method to amortize bond premium or discount of Azen Corporation. (Round answers to 0 decimal places, e.g. 125.)
Interest
Periods
Interest to
Be Paid
Interest Expense
to Be Recorded
Discount
Amortization
Unamortized
Discount
Bond
Carrying Value
Interest
Periods
Interest to
Be Paid
Interest Expense
to Be Recorded
Discount
Amortization
Unamortized
Discount
Bond
Carrying Value
Explanation / Answer
Discount = 412000 - 332015 = 79985
Interest period Interest to be paid ( 412,000 * .07) Interest expense Discount amortization Unamortized discount Bond carrying value issue date 79985 332015 1 28840 29881.35 [332015*.09] 1041.35 [2981.35-28840] 78943.65 [79985-1041.35] 333056.35 [412000-78943.65] 2 28840 29975.07 [333056.35*.09] 1135.07 [29975.07-28840] 77808.58 [78943.65-1135.07] 334191.42 [412000-77808.58]Related Questions
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