24 6.00 points 0 Problem 10-228 [LO 10-S2] On January 1, 2016, a company issues

Question

24 6.00 points 0 Problem 10-228 [LO 10-S2] On January 1, 2016, a company issues 3-year bonds with a face value of $130,000 and a stated interest rate of 7%. Because the market interest rate is 5%, the company receives S 137,080 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 Period Interest Amortized Bonds Premium on Carrying ExpensePremium Payable Bonds PayableValue Ended Cash Paid 01/01/2016 12/31/2016 12/31/2017 12/31/2018

Explanation / Answer

Cash Paid ($)

A= 7 % of FV

Interest Expense ($)

B= 5% * (column F) of the previous row

AmortizedPremium ($)

C= A- B

BondsPayable($)

D

Premium on Bonds Payable ($)

E

CarryingValue ($)

F= D+E

Period Ended

Cash Paid ($)

A= 7 % of FV

Interest Expense ($)

B= 5% * (column F) of the previous row

AmortizedPremium ($)

C= A- B

BondsPayable($)

D

Premium on Bonds Payable ($)

E

CarryingValue ($)

F= D+E

01/01/16 130,000 7,080 137,080 12/31/16 9,100 6,854 2,246 130,000 4,834 134,834 12/31/17 9,100 6,742 2,358 130,000 2,476 132,376 12/31/18 9,100 6,624 2,476 130,000 0 130,000

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