Exercise 14-10 On January 1, 2017, Flint Company sold 11% bonds having a maturit

Question

Exercise 14-10

On January 1, 2017, Flint Company sold 11% bonds having a maturity value of $430,000 for $481,505, which provides the bondholders with a 8% yield. The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of each year. Flint Company allocates interest and unamortized discount or premium on the effective-interest basis

Prepare a schedule of interest expense and bond amortization for 2017–2019. (Round answer to 0 decimal places, e.g. 38,548.)

Prepare the journal entry to record the interest payment and the amortization for 2017.

Prepare the journal entry to record the interest payment and the amortization for 2019.

Exercise 14-10

On January 1, 2017, Flint Company sold 11% bonds having a maturity value of $430,000 for $481,505, which provides the bondholders with a 8% yield. The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of each year. Flint Company allocates interest and unamortized discount or premium on the effective-interest basis

Prepare a schedule of interest expense and bond amortization for 2017–2019. (Round answer to 0 decimal places, e.g. 38,548.)

Prepare the journal entry to record the interest payment and the amortization for 2017.

Prepare the journal entry to record the interest payment and the amortization for 2019.

Explanation / Answer

SOLUTION

(A)

(B, C)

Date Cash Paid Interest expense ($) Premium ($) Carrying Amount ($) 1/1/2017 481,505 31/12/2017 47,300 38,520 8,780 472,725 31/12/2018 47,300 37,818 9,482 463,243 31/12/2019 47,300 37,059 10,241 453,002

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