Question

Ayayai Company sells 10% bonds having a maturity value of $1,400,000 for $1,299,071. The bonds are dated January 1, 2017, and mature January 1, 2022. Interest is payable annually on January 1.

Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to 0 decimal places, e.g. 38,548.)

Schedule of Discount Amortization
Straight-Line Method
Year
Cash
Paid
Interest
Expense
Discount
Amortized
Carrying
Amount of Bonds
Jan. 1, 2017 $

Jan. 1, 2018

Jan. 1, 2019

Jan. 1, 2020

Jan. 1, 2021

Jan. 1, 2022

Answer 1

Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to 0 decimal places, e.g. 38,548.)

Schedule of Discount Amortization
Straight-Line Method

Year	Cash paid	Interst expense	Discount amortized	Carrying amount on bonds
Jan 1,2017				1299071
Jan 1,2018	140000	140000+20186 = 160186	20186	1319257
Jan 1,2019	140000	160186	20186	1339443
Jan 1,2020	140000	160186	20186	1359629
Jan 1,2021	140000	160186	20186	1379815
Jan 1,2022	140000	160185	20185	1400000

Discount amortized = 100929/5 = 20186