Answered: On January 1, 2020, Sunland Company…

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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Question

Oo.82.

Subject :- Account

On January 1, 2020, Sunland Company purchased $360,000, 8% bonds of Aguirre Co. for $332,201. The bonds were purchased to
vield 10% interest. Interest is payable semiannually on July 1 and January 1. The bonds mature on January 1, 2025. Sunland Company
uses the effective-interest method to amortize discount or premium. On January 1, 2022. Sunland Company sold the bonds for
$333.764 after receiving interest to meet its liquidity needs.

Prepare the amortization schedule for the bonds.

Date
1/1/20
7/1/20
1/1/21
7/1/21
1/1/22
7/1/22
1/1/23
7/1/23
1/1/24
7/1/24
1/1/25
Total
$
$
Interest Receivable
Or
Cash Received
i
Schedule of Interest Revenue and Bond Discount
Method
$
Amortization-Effective-Interest
Bonds Purchased to Yield
$
Interest
Revenue
i
$
$
Bond
Discount
Amortization
i
$
Carrying
Amount of
Bonds
332.201

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