2. Fill in the amortization table for each scenario using the effective interest

Question

2. Fill in the amortization table for each scenario using the effective interest rate method. Roll over the headings for help with the calculations.

Enter all amounts as positive numbers. If required, in your computations round the interest expense to the nearest dollar. (Note: Due to rounding issues, some amounts have been provided for you in the tables.)

Assume the annual stated rate is 8% and effective rate is 13%.

Assume the stated rate is 8% and effective rate is 6%.

Semi-annual Period Cash Interest Expense Discount on Bonds Payable Discount on Bonds Payable Balance Carrying Value - - - 12,248 130,752 1 5,720 8,499 2,779 9,469 133,531 2 3 3,357 4 3,357 - 143,000

Explanation / Answer

Semi-annual Period Cash Interest Expense Discount on Bonds Payable Discount on Bonds Payable Balance Carrying Value - - - 12,248 130,752 1 5,720 8,499 2,779 9,469 133,531 2 5,142 8,499 3,357 6,112 136,888 3 5,744 8,499 2,755 3,357 139,643 4 5,142 8,499 3,357 - 143,000 Semi-annual Period Cash Interest Expense Premium on Bonds Payable Premium on Bonds Payable Balance Carrying Value - - - 5,316 148,316 1 5,720 4,449 1,271 4,045 147,045 2 5,837 4,449 1,388 2,657 145,657 3 5,718 4,449 1,269 1,388 144,388 4 5,837 4,449 1,388 - 143,000

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