Answered: On January 1, 2020, Wildhorse 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

On January 1, 2020, Wildhorse Company purchased 8% bonds having a maturity value of $360,000, for $390,329.57. The bonds provide the bondholders with a 6% yield. They are dated January 1, 2020, and mature January 1, 2025, with interest received on January 1 of each year. Wildhorse Company uses the effective-interest method to allocate unamortized discount or premium. The bonds are classified in the held-to-maturity category.

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Prepare a bond amortization schedule. (Round answers to 2 decimal places, eg. 2,525.25.)
Schedule of Interest Revenue and Bond Premium Amortization
Effective-Interest Method
Cash
Interest
Premium
Carrying Amount
of Bonds
Date
Received
Revenue
Amortized
1/1/20
24
390329.57
1/1/21
28800
23419.77
Inter
5380.23
Re
1/1/22
28800
1/1/23
28800
1/1/24
28800
1/1/25
28800
22012.73
6787.29

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