PLEASE PROVIDE COMPUTERIZED ANSWER E10-11 Interpreting a Bond Amortization Sched

Question

PLEASE PROVIDE COMPUTERIZED ANSWER

E10-11 Interpreting a Bond Amortization Schedule LO10-4

1) Santa Corporation issued a bond on January 1 of this year with a face value of $1,000. The bond's coupon rate is 8 percent and interest is paid once a year on December 31. The bond matures in three years. The annual market rate of interest was 10 percent at the time the bond was sold. The following amortization schedule pertains to the bond issued:

Required:

1. What was the bond's issue price?

BOND ISSUE PRIVE: _____________?

2. Did the bond sell at a DISCOUNT or a PREMIUM? and How much was the premium or discount?

3. What amount(s) should be shown on the balance sheet for bonds payable at the end of Year 1 and Year 2?

Bond Payable

YEAR 1: ________________?

YEAR 2: ________________?

4. Show how the following amounts were computed for Year 2: (a) $80, (b) $97, (c) $17, and (d) $982. (Enter percentages in decimals.)

a) |____| |__| |____| = $80

b) |____| |__| |____| = $97

c) |____| |__| |____| = $17

d) |____| |__| |____| = $982

Cash
Paid Interest
Expense Amortization Balance January 1, Year 1 $950 December 31, Year 1 $80 $95 $15 965 December 31, Year 2 80 97 17 982 December 31, Year 3 80 98 18 1,000

Explanation / Answer

1) Bonds issue price = 950

2) Bond is issued at discount and discount is (1000-950) = 50

3) Bonds payable in balance sheet

Year 1 = 965

Year 2 = 982

4) 1000*8% = 80

965*10% = 97

97-80 = 17

965+17 = 982

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