On January 1, 2020, Metlock Company acquires $ 110,000 of Spiderman Products, Inc., 9% bonds at a price of $ 99,611. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Metlock Company a 13% yield. The bonds are classified as held-to-maturity. Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. (Round answers to 0 decimal places, e.g. 2,500.)Schedule of Interest Revenue and Bond Discount AmortizationEffective-Interest MethodBond Purchased to YieldDate CashReceived InterestRevenue Bond DiscountAmortization Carrying Amountof Bonds1/1/20 $ enter a dollar amount $ enter a dollar amount $ enter a dollar amount $ enter a dollar amount1/1/21 enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount1/1/22 enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount1/1/23 enter a dollar amount enter a dollar amount enter a dollar amount enter a dollar amount

The question is based on the concept of Financial Accounting.Discount= $110000-99611= $10389 Cash received= $110000*9%= $9900 Bond Discount amortization= $10389/3= $3463 Interest revenue= Cash received+Bond Discount amortization = $9900+3463= $13363 Schedule of Interest Revenue and Bond Discount AmortizationEffective-Interest MethodBond Purchased to Yield Date CashReceived InterestRevenue Bond DiscountAmortization Carrying Amountof Bonds 1/1/20 $99611 1/1/21 $9900 (99611*13%)= 12949 (12949-9900)= 3049 (99611+3049)= 102660 1/1/22 9900 (102660*13%)= 13346 (13346-9900)= 3446 (102660+3446)= 106106 1/1/23 9900 (106106*13%)= 13794 (13794-9900)= 3894 (106106+3894)= 110000

Answered: On January 1, 2020, Metlock 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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On January 1, 2020, Metlock Company acquires $ 110,000 of Spiderman Products, Inc., 9% bonds at a price of $ 99,611. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Metlock Company a 13% yield. The bonds are classified as held-to-maturity.

Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method. (Round answers to 0 decimal places, e.g. 2,500.)

Schedule of Interest Revenue and Bond Discount Amortization Effective-Interest Method Bond Purchased to Yield
Date	Cash Received	Interest Revenue	Bond Discount Amortization	Carrying Amount of Bonds
1/1/20	$ enter a dollar amount	$ enter a dollar amount	$ enter a dollar amount	$ enter a dollar amount
1/1/21	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
1/1/22	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount
1/1/23	enter a dollar amount	enter a dollar amount	enter a dollar amount	enter a dollar amount

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