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On January 1, 2017, Flounder Corporation issued $1,650,000 face value, 8%, 10- year bonds at $1,447,229....

On January 1, 2017, Flounder Corporation issued $1,650,000 face value, 8%, 10- year bonds at $1,447,229. This price resulted in an effective-interest rate of 10% on the bonds. Flounder uses the effective-interest method to amortize bond premium or discount. The bonds pay annual interest January 1.

Prepare an amortization table through December 31, 2019 (three interest periods) for this bond issue.

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Answer #1
A B C D = C - B E F G = F - E
Date Interest Payment
(Stated Rate 8%)		 Interest Expense
(Effective Rate 10%)		 Amortization Debit Balance in Bond Discount Credit Balance in Bonds Payable Book value of Bonds
Jan. 1, 2017 202771 1650000 1447229
Dec. 31, 2017 132000 144722.90 12722.90 190048.10 1650000 1459951.90
Dec. 31, 2018 132000 145995.19 13995.19 176052.91 1650000 1473947.09
Dec. 31, 2019 132000 147394.71 15394.71 160658.20 1650000 1489341.80

Note: Amounts rounded off to 2 decimal places.

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