Question

On January 1, 2018, a company issues 3-year bonds with a face value of $190,000 and...

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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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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