
Concept explainers
a.
Prepare an amortization table.
a.

Explanation of Solution
Amortization Schedule:
A schedule that gives the detail about each loan payment and shows the allocation of principal and interest over the life of the note, or bond is called amortization schedule.
Amortization table is prepared as follows:
Amortization Table for Bonds Premium | ||||
Date | Cash Payment ($) | Interest Expense ($) | Premium Amortization ($) |
Carrying Value ($) |
January 1, 2018 | 124,920 | |||
December 31, 2018 | 9,600 (1) | 8,744 (2) | 856 (3) | 124,064 (4) |
December 31, 2019 | 9,600 (1) | 8,684 (5) | 916 (6) | 123,148 (7) |
December 31, 2020 | 9,600 (1) | 8,620 (8) | 980 (9) | 122,168 (10) |
December 31, 2021 | 9,600 (1) | 8,552 (11) | 1,048 (9) | 121,120 (13) |
December 31, 2022 | 9,600 (1) | 8,480 (14) | 1,120 (15) | 120,000 (16) |
Totals | 48,000 | 43,080 | 4,920 |
Table (1)
Working notes:
Working note 1:
Calculate the cash payment from 2018 to 2022.
Working note 2:
Calculate the interest Expense as on December 31, 2018:
Working note 3:
Calculate the premium amortization as on December 31, 2018:
Working note 4:
Calculate the carrying
Working note 5:
Calculate the interest Expense as on December 31, 2019:
Working note 6:
Calculate the premium amortization as on December 31, 2019:
Working note 7:
Calculate the carrying value of bond as on December 31, 2019:
Working note 8:
Calculate the interest Expense as on December 31, 2020:
Working note 9:
Calculate the premium amortization as on December 31, 2020:
Working note 10:
Calculate the carrying value of bond as on December 31, 2020:
Working note 11:
Calculate the interest Expense as on December 31, 2021:
Working note 12:
Calculate the premium amortization as on December 31, 2021:
Working note 13:
Calculate the carrying value of bond as on December 31, 2021:
Working note 14:
Calculate the interest Expense as on December 31, 2022:
Note: $8,478.4 rounded to $10,597.
Working note 15:
Calculate the premium amortization as on December 31, 2022:
Working note 16:
Calculate the carrying value of bond as on December 31, 2022:
b.
State the item that would appear on the
b.

Explanation of Solution
Balance sheet: Balance sheet is the financial statement that reports a company’s resources (assets) and claims of creditors (liabilities) and stockholders (stockholders’ equity) over those resources. The resources of the company are assets which include money contributed by stockholders and creditors. Hence, the main elements of the balance sheet are assets, liabilities, and
- The item that would appear on the Balance sheet of 2020 is the carrying value of bond liability. The premium amount is included while, reporting the carrying value ($122,168).
- The face value of the bond and the premium received on bond is disclosed in the notes to the financial statements. Alternatively, the face value plus the premium could be shown in the following way:
Particulars | Amount ($) |
Bond liability | 120,000 |
Add: Bond Premium (17) | 2,168 |
Carrying value | 122,168 |
Table (2)
Working note 17:
Calculate the total premium on bond:
c.
State the item that would appear on the income statement of 2020.
c.

Explanation of Solution
Income statement: Income statement is the financial statement of a company which shows all the revenues earned and expenses incurred by the company over a period of time.
The statement of income will report interest expense of $8,620.
d.
State the item that would appear on the statement of
d.

Explanation of Solution
Statement of cash flows: Statement of cash flows is one among the financial statement of a Company statement that shows aggregate data of all
The cash flow statement will report
Want to see more full solutions like this?
Chapter 7 Solutions
Survey Of Accounting
- Please provide the correct answer to this general accounting problem using accurate calculations.arrow_forwardGeneral accountingarrow_forwardQuestion 3 of 12 View Policies - / 12.5 III Current Attempt in Progress Blossom Company manufactures boats, each of which is equipped with a cellular phone. During September, 2025, the company purchased 102 cellular phones at a cost of $110 each. Blossom withdrew 78 phones from the warehouse during the month. 28 of these phones were installed in salespersons' cars and the remaining 50 phones were put in boats manufactured during the month. The remaining phones are to be installed in boats in the next production run. Of the boats put into production during September, 2025, 80% were completed and transferred to the company's storage lot. Fifty percent of the boats completed during the month were sold by September 30. Determine the cost of cellular phones that would appear in each of the following accounts at September 30, 2025: Raw materials inventory Work in process inventory Finished goods inventory Cost of goods sold Selling expenses Total $ $arrow_forward
- Crystal Lake Co. has the following assets and liabilities: Accounts Receivable ($1,150), Equipment ($12,400), Accounts Payable ($5,300),Prepaid Rent ($2,500), Supplies ($475), Bank Loan ($3,500), and Tools ($650). Crystal Lake Co.'s total liabilities are ___.arrow_forwardAccurate answerarrow_forwardQuestion 1 of 12 View Policies Current Attempt in Progress Splish Brothers Express reports the following costs and expenses in June 2022 for its delivery service. Indirect materials used $7,460 Drivers' salaries $18,560 Depreciation on delivery equipment 12,920 Advertising 5,480 Dispatcher's salary 5,800 Delivery equipment repairs 348 Property taxes on office building 1,060 Office supplies 754 CEO's salary 13,920 Office utilities 1,160 Gas and oil for delivery trucks 2,480 Repairs on office equipment 222 Determine the total amount of (a) delivery service (product) costs and (b) period costs. Delivery service (product) costs Period costs - / 12.5 IIIarrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningFinancial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
- Excel Applications for Accounting PrinciplesAccountingISBN:9781111581565Author:Gaylord N. SmithPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College




