Cornerstone Exercise 9-27 (Algorithmic) Debt Issued at a Discount (Straight Line

Question

Cornerstone Exercise 9-27 (Algorithmic) Debt Issued at a Discount (Straight Line) On January 1, 2020, Drew Company issued $1,250,000, 5-year bonds for $1,175,000. The stated rate of interest was 10% and interest is paid annually on December 31. Required: Prepare the amortization table for Drew Company's bonds. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". Drew Company Amortization Table Period Cash Payment (Credit) At issue 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Interest Expense (Debit) Discount on Bonds Payable (Credit) Discount on Bonds Payable Balance Carrying Value 0D 0

Explanation / Answer

Amortization table :

Period Cash payment Interest expense Discount on bonds payable Discount on bonds payable balance Carrying value At issue 1175000 12/31/20 125000 140000 15000 60000 1190000 12/31/21 125000 140000 15000 45000 1205000 12/31/22 125000 140000 15000 30000 1220000 12/31/23 125000 140000 15000 15000 1235000 12/31/24 125000 140000 15000 0 1250000

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