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Unformatted text preview: amortization The entry Candlestick makes on December 31 is: Bond Interest Expense Premium on Bonds Payable Bond Interest Payable (To record accrued interest and amortization of bond premium) For the second interest period, interest expense will be $9,638, and the premium amortization will be $362. Note that the amount of periodic interest expense decreases over the life of the bond when companies apply the effective-interest method to bonds issued at a premium. The reason is that a constant percentage is applied to a decreasing bond carrying value to compute interest expense. The carrying value is decreasing because of the amortization of the premium....
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This note was uploaded on 11/08/2011 for the course ACCOUNTING ac 201 taught by Professor - during the Spring '11 term at Montgomery.
- Spring '11