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Exercise 10-22A (Algo) Effective interest amortization for a bond premium LO 10-7 On January 1, Year 1, Hart Company issued bonds with a face value of $117,000, a stated rate of interest of 10 percent, and a five-year erm to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the bonds were issued. The bonds sold for $121,551. Hart used the effective interest rate method to amortize the bond premium. Note: Round your intermediate calculations and final answers to the nearest whole number. Required: a. Prepare an amortization table. Date Cash Interest Premium Carrying

Exercise 10-22A (Algo) Effective interest amortization for a bond premium LO 10-7 On January 1, Year 1, Hart Company issued bonds with a face value of $117,000, a stated rate of interest of 10 percent, and a five-year erm to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the bonds were issued. The bonds sold for $121,551. Hart used the effective interest rate method to amortize the bond premium. Note: Round your intermediate calculations and final answers to the nearest whole number. Required: a. Prepare an amortization table. Date Cash Interest Premium Carrying

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Exercise 10-22A (Algo) Effective interest amortization for a bond premium LO 10-7 On January 1, Year 1, Hart Company issued bonds with a face value of $117,000, a stated rate of interest of 10 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the bonds were issued. The bonds sold for $121,551. Hart used the effective interest rate method to amortize the bond premium. Note: Round your intermediate calculations and final answers to the nearest whole number. Required: a. Prepare an amortization table. Date Cash Interest Premium Payment Expense Amortization Carrying Value January 1, Year 1 December 31, Year 1 December 31, Year 2 $ 11,700 $ 10,940 $ 760 $ 121,551 120,791 December 31, Year 3 December 31, Year 4 December 31, Year 5 Totals b. What is the carrying value that would appear on the Year 4 balance sheet? c. What is the interest expense that would appear on the Year 4 income statement? d. What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows? b. Carrying value on the Year 4 c. Interest expense for Year 4 d. Cash outflow for interest in Year 4
Transcribed Image Text:Exercise 10-22A (Algo) Effective interest amortization for a bond premium LO 10-7 On January 1, Year 1, Hart Company issued bonds with a face value of $117,000, a stated rate of interest of 10 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 9 percent at the time the bonds were issued. The bonds sold for $121,551. Hart used the effective interest rate method to amortize the bond premium. Note: Round your intermediate calculations and final answers to the nearest whole number. Required: a. Prepare an amortization table. Date Cash Interest Premium Payment Expense Amortization Carrying Value January 1, Year 1 December 31, Year 1 December 31, Year 2 $ 11,700 $ 10,940 $ 760 $ 121,551 120,791 December 31, Year 3 December 31, Year 4 December 31, Year 5 Totals b. What is the carrying value that would appear on the Year 4 balance sheet? c. What is the interest expense that would appear on the Year 4 income statement? d. What is the amount of cash outflow for interest that would appear in the operating activities section of the Year 4 statement of cash flows? b. Carrying value on the Year 4 c. Interest expense for Year 4 d. Cash outflow for interest in Year 4
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