Question

On January 1, 2020, Ivanhoe Corporation issued $2,060,000 face value, 4%, 10-year bonds at $1,900,932. This price resulted in an effective-interest rate of 5% on the bonds. Lock uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest on January 1.

Prepare an amortization table through December 31, 2022 (three interest periods) for this bond issue. (Round answers to 0 decimal places, e.g. 15,250.)

LOCK CORPORATION Bond Discount Amortization Effective-Interest Method—Annual Interest Payments
Annual Interest Periods		Interest to Be Paid		Interest Expense to Be Recorded		Discount Amortization		Unamortized Discount		Bond Carrying Value
Issue date								$		$
1		$		$		$
2
3

Answer 1

Annual Interest Periods	Interest to Be Paid	Interest Expense to Be Recorded	Discount Amortization	Unamortized Discount	Bond Carrying Value
Issue date				159068	1900932
1	82400	95047	12647	146421	1913579
2	82400	95679	13279	133142	1926858
3	82400	96343	13943	119199	1940801
Workings:
Interest to Be Paid	82400	=2060000*4%
Interest expense:
1	95047	=1900932*5%
2	95679	=1913579*5%
3	96343	=1926858*5%