Question

On June 1, 2019, Blossom Company sold $3,660,000 in long-term bonds for $3,210,200. The bonds will mature in 10 years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest annually on May 31 of each year. The bonds are to be accounted for under the effective-interest method.

Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each May 31.

Date	Credit Cash	Debit Interest Expense	Credit Bond Discount	Carrying Amount of Bonds
6/1/19				$
5/31/20	$	$	$
5/31/21
5/31/22
5/31/23

Answer 1

Date	Credit Cash	Debit Interest Expense	Credit Bond Discount	Carrying Amount of Bonds
6/1/19				3210200
5/31/20	292800	321020	28220	3238420
5/31/21	292800	323842	31042	3269462
5/31/22	292800	326946	34146	3303608
5/31/23	292800	330361	37561	3341169

Workings:
Cash interest	292800	=3660000*8%
Interest expense:
5/31/20	321020	=3210200*10%
5/31/21	323842	=3238420*10%
5/31/22	326946	=3269462*10%
5/31/23	330361	=3303608*10%