Complete a bond amortization schedule

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Reference no: EM13175455

Problem 1

A company issued a $50,000 four-year, 4% bond on January 1. Bond interest is paid each December 31. The bond was sold to yield 5%.

Required:

Complete a bond amortization schedule for the life of the bond using the effective interest method.

Problem 2

A company with an annual accounting year ending on December 31 issued bonds on January 1 in the amount of $500,000 maturing in 10 years with interest payable each June 30 and December 31 at a 6% annual rate. The company uses straight-line amortization for any bond discounts or premiums.

Required:

Provide the following amounts to be reported in the company financial statements at the end of year one under each scenario.

	Issued at Par	Issued at 99	Issued at 102
Interest expense
Bonds payable
Unamortized premium or discount
Net bond liability
Cash interest paid

Reference no: EM13175455

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