Effective Interest Premium Amortization Polk Incorporated issued $440,000 of 13%
ID: 2420523 • Letter: E
Question
Effective Interest Premium Amortization
Polk Incorporated issued $440,000 of 13% bonds on July 1, 2013, for $454,963.51. The bonds were dated January 1, 2013, pay interest on each June 30 and December 31, are due December 31, 2017, and were issued to yield 12%. Polk uses the effective interest method of amortization.
In addition, prepare a bond interest expense and premium amortization schedule for the bonds through June 30, 2014.
Polk incorporated
Bond interest Expense and Premium Amortization Schedule (Partial)
Effective Interest Method
13% Bonds Sold to Yield 12%
Date Cash Credit Interest Expense Debit Unamortized Premium Debit Book Value of Bonds 07/01/13 $454,963.51 12/31/13 $28,600 $27,297.81 $1,302.19 $????? 06/30/14 $28,600 $27,219.68 $1,380.32 $452,281Explanation / Answer
A B C D E F G $ Date Interest Payment @6.5% Interest expenses at 6%*G Amortization of Bond C-B cr, balance in the a/c Bond Premium a/c Credit balance in the Bond payable Carrying value of Bond F+E Credit cash Debit Interest Expense Bond Premium 1-Jul-13 14964 440000 454964 Dec,31 2013 28600 27298 -1302 13661 440000 453661 June 30,2014 28600 27220 -1380 12281 440000 452281 Dec,31 2014 28600 27137 -1463 10818 440000 450818 June 30,2015 28600 27049 -1551 9267 440000 449267 Dec,31 2015 28600 26956 -1644 7623 440000 447623 June 30,2016 28600 26857 -1743 5880 440000 445880 Dec,31 2016 28600 26753 -1407 4473 440000 444473 June 30,2017 28600 26668 -1932 2541 440000 442541 Dec,31 2017 28600 26552 -2048 494 440000 440494
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.