Effective interest rate method

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In January 1, Year 2017, Kennard Co. issued $2,000,000, 5%, 10-year bonds, with interest payable on June 30 and December 31 when the market rate of interest for similar bonds was 6%. Use the following format and round figures to the nearest dollar.

1. Actual proceeds received from the issuance of the bonds.

2. Amortization schedule for Year 1 and Year 2 using the effective interest rate method.

Date Cash Paid Interest Expense Amortization Bond Carry Value

3. Show how this bond would be reported on the balance sheet at December 31, Year 2.

Reference no: EM132203945

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