Question

On January 1, 2013, Pitre Incorporated issued bonds with a face value of $120,000, a stated rate of interest of 8 percent, and a five-year term to maturity. Interest is payable in cash on December 31 of each year. The effective rate of interest was 7 percent at the time the bonds were issued. The bonds sold for $124,920. Pitre used the effective interest rate method to amortize bond discount.

Required
a. Prepare an amortization table as shown below:


b. What item(s) in the table would appear on the 2015 balance sheet?
c. What item(s) in the table would appear on the 2015 income statement?
d. What item(s) in the table would appear on the 2015 statement of cashflows?


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  • CreatedOctober 26, 2013
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