On December 31, 2018, Ironman Steel issued $800,000, eight-year bonds for $880,0
ID: 2542174 • Letter: O
Question
On December 31, 2018, Ironman Steel issued $800,000, eight-year bonds for $880,000. The stated rate of interest was 6% and interest is paid annually on December 31 Required: Prepare the amortization table for Ironman Steel's bonds. For those boxes in which no entry is required, leave the box blank. If the amount is zero, enter "O" Ironman Steel Amortization Table Period (Credit) Cash Payment Interest Expense Premium on Bonds Payable Premium on Bonds Payable Balance Bond Payable Carrying (Credit) (Debit) Value 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 12/31/25 12/31/26Explanation / Answer
Solution:
Amortization Table
Period
Cash Payment (Credit)
(Face Value 800,000*Stated Rate of Interest 6%)
Interest Expense (Debit)
(Cash Payment - Premium on Bonds Payable Debit)
Premium on Bonds Payable (Debit)
(Premium on Bonds Payable $80,000 / Period to Maturity 8) (Assumed that straight line method is used to amortize premium)
Premium on Bonds Payable balance (Credit)
Bond Payable Carrying Value
At issue
$0
$0
$0
$80,000
$880,000
12/31/2019
$48,000
$38,000
$10,000
$70,000
$870,000
12/31/2020
$48,000
$38,000
$10,000
$60,000
$860,000
12/31/2021
$48,000
$38,000
$10,000
$50,000
$850,000
12/31/2022
$48,000
$38,000
$10,000
$40,000
$840,000
12/31/2023
$48,000
$38,000
$10,000
$30,000
$830,000
12/31/2024
$48,000
$38,000
$10,000
$20,000
$820,000
12/31/2025
$48,000
$38,000
$10,000
$10,000
$810,000
12/31/2026
$48,000
$38,000
$10,000
$0
$800,000
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Amortization Table
Period
Cash Payment (Credit)
(Face Value 800,000*Stated Rate of Interest 6%)
Interest Expense (Debit)
(Cash Payment - Premium on Bonds Payable Debit)
Premium on Bonds Payable (Debit)
(Premium on Bonds Payable $80,000 / Period to Maturity 8) (Assumed that straight line method is used to amortize premium)
Premium on Bonds Payable balance (Credit)
Bond Payable Carrying Value
At issue
$0
$0
$0
$80,000
$880,000
12/31/2019
$48,000
$38,000
$10,000
$70,000
$870,000
12/31/2020
$48,000
$38,000
$10,000
$60,000
$860,000
12/31/2021
$48,000
$38,000
$10,000
$50,000
$850,000
12/31/2022
$48,000
$38,000
$10,000
$40,000
$840,000
12/31/2023
$48,000
$38,000
$10,000
$30,000
$830,000
12/31/2024
$48,000
$38,000
$10,000
$20,000
$820,000
12/31/2025
$48,000
$38,000
$10,000
$10,000
$810,000
12/31/2026
$48,000
$38,000
$10,000
$0
$800,000
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