On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Teal Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category. **Title: Schedule of Interest Revenue and Bond Premium Amortization Using the Effective-Interest Method****Instructions:**Prepare a bond amortization schedule. **Round answers to 2 decimal places**, e.g., 2,525.25.**Table:**| Date | Cash Received | Interest Revenue | Premium Amortized | Carrying Amount of Bonds ||---------|---------------|------------------|-------------------|--------------------------|| 1/1/20 | $ | $ | $ | $ || 1/1/21 | $ | $ | $ | $ || 1/1/22 | $ | $ | $ | $ || 1/1/23 | $ | $ | $ | $ || 1/1/24 | $ | $ | $ | $ || 1/1/25 | $ | $ | $ | $ |**Explanation:**This table is used to track the effective-interest method of amortizing bond premiums over a specified period. The columns indicate:- **Date:** The specific date the transaction or calculation is recorded.- **Cash Received:** The amount of cash received from interest payments on the bond.- **Interest Revenue:** The calculated interest revenue for each period.- **Premium Amortized:** The portion of the bond premium that is amortized for each period.- **Carrying Amount of Bonds:** The carrying value of the bond after accounting for amortization. This schedule helps in determining how the bond’s carrying amount changes over time due to the amortization of premium.

The amount of interest expense, interest payment, and discount or premium amortization of a bond in…

Answered: 20, Teal Company purchased 9% bonds…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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On January 1, 2020, Teal Company purchased 9% bonds having a maturity value of $370,000, for $400,342.96. The bonds provide the bondholders with a 7% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Teal Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

**Title: Schedule of Interest Revenue and Bond Premium Amortization Using the Effective-Interest Method**

**Instructions:**
Prepare a bond amortization schedule. **Round answers to 2 decimal places**, e.g., 2,525.25.

**Table:**

| Date | Cash Received | Interest Revenue | Premium Amortized | Carrying Amount of Bonds |
|---------|---------------|------------------|-------------------|--------------------------|
| 1/1/20 | $ | $ | $ | $ |
| 1/1/21 | $ | $ | $ | $ |
| 1/1/22 | $ | $ | $ | $ |
| 1/1/23 | $ | $ | $ | $ |
| 1/1/24 | $ | $ | $ | $ |
| 1/1/25 | $ | $ | $ | $ |

**Explanation:**
This table is used to track the effective-interest method of amortizing bond premiums over a specified period. The columns indicate:

- **Date:** The specific date the transaction or calculation is recorded.
- **Cash Received:** The amount of cash received from interest payments on the bond.
- **Interest Revenue:** The calculated interest revenue for each period.
- **Premium Amortized:** The portion of the bond premium that is amortized for each period.
- **Carrying Amount of Bonds:** The carrying value of the bond after accounting for amortization.

This schedule helps in determining how the bond’s carrying amount changes over time due to the amortization of premium.

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