Question

# On June 1, 2019, Bramble Company sold \$3,120,000 in long-term bonds for \$2,736,600. The bonds will...

On June 1, 2019, Bramble Company sold \$3,120,000 in long-term bonds for \$2,736,600. 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.(Please round interest expense and bond discount columns to zero decimal places.)

Solution:

 Bond Amortization Schedule Date Cash Paid Interest Expense Discoount Amortized Unamortized Discount Carrying Value 1-Jun-19 \$383,400 \$2,736,600 31-May-20 \$249,600 \$273,660 \$24,060 \$359,340 \$2,760,660 31-May-21 \$249,600 \$276,066 \$26,466 \$332,874 \$2,787,126 31-May-22 \$249,600 \$278,713 \$29,113 \$303,761 \$2,816,239 31-May-23 \$249,600 \$281,624 \$32,024 \$271,738 \$2,848,262 31-May-24 \$249,600 \$284,826 \$35,226 \$236,511 \$2,883,489 31-May-25 \$249,600 \$288,349 \$38,749 \$197,762 \$2,922,238 31-May-26 \$249,600 \$292,224 \$42,624 \$155,139 \$2,964,861 31-May-27 \$249,600 \$296,486 \$46,886 \$108,253 \$3,011,747 31-May-28 \$249,600 \$301,175 \$51,575 \$56,678 \$3,063,322 31-May-29 \$249,600 \$306,278 \$56,678 \$0 \$3,120,000