Problem 10-2 - discount amortization Interest expense...

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Terry Crew ACCT 101 Session 11 10-2 1. Prepare a five-year table to amortize the discount using the effective interest method. Discount Amortization Effective Interest Method of Amortization Col. 1 Col. 2 Col. 3 Col. 4 Cash Interest Discount Interest Expense Amortized Carrying Date 10% 12% Col. 2 – Col. 1 Value 1/1/2007 9,275 12/31/2007 1,000 1,113 113 9,388 12/31/2008 1,000 1,127 127 9,515 12/31/2009 1,000 1,142 142 9,657 12/31/2010 1,000 1,159 159 9,816 12/31/2011 1,000 1,178 178 9,994 Totals 5,000 5,719 719 2. What is the total interest expense over the life of the bonds? cash interest payment?
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Unformatted text preview: discount amortization? Interest expense $5,719 Cash interest payment 5,000 Discount amortized $719 3. Prepare the journal entry for the payment of interest and the amortization of discount on December 31(the third year), and determine the balance sheet presentation of the bonds on that date. Dec. 31 (journal entry) Interest Expense 1,142 Discount on Bonds Payable 142 Cash 1,000 Balance Sheet Presentation as of December 31, 2010 Bonds payable $1,000 Less: Discount on bonds payable 142 $858...
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Problem 10-2 - discount amortization Interest expense...

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