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E10-15 (Supplement 10B) Recording the Effects of a Discount Bond Issue and First Interest Payment...

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Accounting

E10-15 (Supplement 10B) Recording the Effects of a Discount Bond Issue and First Interest Payment and Preparing a Discount Amortization Schedule (Effective-Interest Amortization) [LO 10-S2]

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On January 1, when the market interest rate was 8 percent, Seton Corporation completed a $280,000, 7 percent bond issue for $261,214. The bonds pay interest each December 31 and mature in 10 years. Assume Seton Corporation uses the effective-interest method to amortize the bond discount.

E10-15 Part 3

  1. Prepare a bond discount amortization schedule for these bonds. (Do not round intermediate calculations. Round your answers to the nearest dollar.)

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Changes During the Period Ending Bond Liability Balances Period Ended Interest Expense Cash Paid Discount Amortized Bonds Payable Discount on Bonds Payable Carrying Value Start 0 Yr 1 End 20,897 1,297 19,600 19,600 19,600 280,000 280,000 280,000 280,000 Yr 2 End Yr 3 End 280,000 280,000 Yr 4 End 280,000 280,000 280,000 Yr 5 End 280,000 280, Yr 6 End 000 Yr 7 End 19,600 19,600 19,600 19,600 19,600 19,600 19,600 Yr 8 End 280,000 280,000 280,000 280,000 280,000 280,000 280,000 Yr 9 End Yr 10 End 280,000 0

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