Schedule of interest revenue and bond discount amortization

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Reference no: EM13285338

Exercise 17-5
On January 1, 2013, Phantom Company acquires $312,100 of Spiderman Products, Inc., 9% bonds at a price of $296,847. The interest is payable each December 31, and the bonds mature December 31, 2015. The investment will provide Phantom Company a 11.00% yield. The bonds are classified as held-to-maturity.

Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method. (Round answers to 0 decimal places, e.g. 2,500.)

Schedule of Interest Revenue and Bond Discount Amortization
Straight-line Method
Bond Purchased to Yield

Date
Cash
Received
Interest
Revenue
Bond Discount
Amortization
Carrying Amount
of Bonds
1/1/13
$
12/31/13
$
$
$

12/31/14

12/31/15
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
1/1/13
$
12/31/13
$
$
$

12/31/14




12/31/15

* Difference due to rounding
(c) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the straight-line method.
(d) Prepare the journal entry for the interest receipt of December 31, 2014, and the discount amortization under the effective-interest method.

(Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

No.
Date
Account Titles and Explanation
Debit
Credit
(c)
December 31, 2014

(d)December 31, 2014

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Reference no: EM13285338

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