On January 1, when the market interest rate was 9 percent, Seton Corporation com
ID: 2577163 • Letter: O
Question
On January 1, when the market interest rate was 9 percent, Seton Corporation completed a $180,000, 8 percent bond issue for $168,447. The bonds pay interest each December 31 and mature in 10 years. Assume Seton Corporation uses the effective-interest method to amortize the bond discount.
On January 1, when the market interest rate was 9 percent, Seton Corporation completed a $180,000, 8 percent bond issue for $168,447. The bonds pay interest each December 31 and mature in 10 years. Assume Seton Corporation uses the effective-interest method to amortize the bond discount.
3. Prepare a bond discount amortization schedule for these bonds. (Do not round intermediate calculations. Round your answers to the nearest dollar.) Changes During the Period Ending Bond Liability Balances DISCOunt on Bonds Payable Interest Expense Period DISCOunt Cash Paid Bonds Payable Carrying Value Ended Start Yr 1 End Yr 2 End Yr 3 End Yr 4 End Yr 5 End Yr 6 End Yr 7 End Yr 8 End Yr 9 End Yr 10 End Amortized 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 168,447 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 180,000 11,553 15,160 14,400 14,400 14,400 14,400 14,400 14,400 14,400 14,400 14,400 14,400 760Explanation / Answer
Note: There is balance of $ 2.88 in sicount on bonds Payable this is because the round off diiference.
Period Interest Expenses Cash Paid Discount amortized Bonds Payable Discount on Bonds Payable Carrying Value Start $ 1,80,000 $ 11,553 $ 1,68,447 Year 1 End $ 15,160 $ 14,400 $ 760 $ 1,80,000 $ 10,793 $ 1,69,207 Year 2 End $ 15,229 $ 14,400 $ 829 $ 1,80,000 $ 9,964 $ 1,70,036 Year 3 End $ 15,303 $ 14,400 $ 903 $ 1,80,000 $ 9,061 $ 1,70,939 Year 4 End $ 15,385 $ 14,400 $ 985 $ 1,80,000 $ 8,076 $ 1,71,924 Year 5 End $ 15,473 $ 14,400 $ 1,073 $ 1,80,000 $ 7,003 $ 1,72,997 Year 6 End $ 15,570 $ 14,400 $ 1,170 $ 1,80,000 $ 5,834 $ 1,74,166 Year 7 End $ 15,675 $ 14,400 $ 1,275 $ 1,80,000 $ 4,559 $ 1,75,441 Year 8 End $ 15,790 $ 14,400 $ 1,390 $ 1,80,000 $ 3,169 $ 1,76,831 Year 9 End $ 15,915 $ 14,400 $ 1,515 $ 1,80,000 $ 1,651 $ 1,78,349 (Round of $ 2.88) Year 10 End $ 16,051 $ 14,400 $ 1,651 $ 1,80,000 $ 0 $ 1,80,000