On January 1, 2016, Everly Bottle Company sold $3,000,000 in long-term bonds for $2,631,300. The...
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Accounting
On January 1, 2016, Everly Bottle Company sold $3,000,000 in long-term bonds for $2,631,300. The bonds will mature in 10 years and have a stated interest rate of 8% and a market yield rate of 10%. The bonds pay interest annually on December 31 of each year. The bonds are to be accounted for under the effective-interest method. Construct a bond amortization table for the first three years, 2016, 2017 and 2018 to indicate the amount of interest expense and discount amortization at each December 31.
Amortization of Carrying Amount
Date Cash Interest Interest Expense Bond Discount of Bonds
01/01/16
12/31/16
12/31/17
12/31/18
Make journal entries at interest payment dates of 12/31/16 and 12/31/17.
12/31/16
12/31/17
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