On January 1, 2020, Pronghorn Company acquires $270,000 of Spiderman Products, Inc., 9% bonds at a price of $244,500. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Pronghorn 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 1/1/21 1/1/22 1/1/23
On January 1, 2020, Pronghorn Company acquires $270,000 of Spiderman Products, Inc., 9% bonds at a price of $244,500. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Pronghorn 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 1/1/21 1/1/22 1/1/23
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, 2020, Pronghorn Company acquires $270,000 of Spiderman Products, Inc., 9% bonds at a price of $244,500. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Pronghorn 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.)
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Schedule of Interest Revenue and Bond Discount Amortization
Effective-Interest Method Bond Purchased to Yield |
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|---|---|---|---|---|---|---|---|---|
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Date |
Cash
Received |
Interest
Revenue |
Bond Discount
Amortization |
Carrying Amount
of Bonds |
||||
|
1/1/20
|
||||||||
|
1/1/21
|
||||||||
|
1/1/22
|
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|
1/1/23
|
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