ACCOUNTING hapters 10-13+ Appendix D On January 1, 2016, a company issues 3-year

Question

ACCOUNTING hapters 10-13+ Appendix D On January 1, 2016, a company issues 3-year bonds with a face value of $160,000 and a stated interest rate of 7%. Because the market interest rate is 5%, the company receives $168,714 for the bonds. Required: Fll in the table assuming the company uses effective-interest bond amortization (Round your answers to the nearest whole dollar.) Table Period CashInterest Amortized Bonds Premium on Carrying Paid Expense Premium Payable Bonds Payable Value Ended 01/01/2016 12/31/2016 1231/2017 12/31/2018

Explanation / Answer

Effective interest method 7% 5% Year Cash paid Interest expense Premium amortized Bonds payable Premium on bonds Carrying amount 01-01-2016 160000 8714 168714 31-12-2016 11200 8436 2764 160000 5950 165950 31-12-2017 11200 8297 2903 160000 3047 163047 31-12-2018 11000 8152 2848 160000 0 100000

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