Question

On January 1, 2018, a company issues 3-year bonds with a face value of $190,000 and a stated interest rate of 7%. Because the market interest rate is 5%, the company receives $200,347 for the bonds.

**Required:**

Fill in the table assuming the company uses effective-interest
bond amortization. **(Round your answers to the
nearest whole dollar.)**

rev: 04_19_2019_QC_CS-166500

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Question 2 of 3 Total**2** of 3

Answer #1

Period end |
Cash paid |
Interest expense |
Amortized Premium |
Bonds payable |
Premium on Bonds payable |
Carrying value |

01/01/2018 | 0 | 0 | 0 | 190000 | 10347 | 200347 |

12/31/2018 | 13300 | 10017 | 3283 | 190000 | 7064 | 197064 |

12/31/2019 | 13300 | 9853 | 3447 | 190000 | 3617 | 193617 |

12/31/2020 | 13300 | 9683 | 3617 | 190000 | 0 | 190000 |

Workings: |
||

Cash paid | 13300 | =190000*7% |

Interest expense: | ||

12/31/2018 | 10017 | =200347*5% |

12/31/2019 | 9853 | =197064*5% |

12/31/2020 | 9683 | =193617*5% |

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