E10-15 (Air) Preparing a Bond Amortization Schedule for a Bond Issued at a Premium and Determining...

Transcribed Image Text:

E10-15 (Air) Preparing a Bond Amortization Schedule for a Bond Issued at a Premium and Determining Report mounts LO10-5 On January 1 of this year, Houston Company issued a bond with a face value of $16,500 and a coupon rate of 6 percent. The bond matures in 3 years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 5 percent. Houston uses the effective-interest amortization method. (FV of $1. PV of $1. FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: 1. Complete a bond amortization schedule for all three years of the bond's life. 2. What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete a bond amortization schedule for all three years of the bond's life. Note: Enter all values as positive values. Round your intermediate calculations and final answers to whole dollars. < Prev 4 of 4 Next Required 1 Required 2 Complete a bond amortization schedule for all three years of the bond's life. Note: Enter all values as positive values. Round your intermediate calculations and final answers to whole dollars. Date Cash Interest Interest Expense Book Value of Amortization Bond January 01, Year 1 December 31, Year 1 $ 990 December 31, Year 2 $ 990 December 31, Year 3 $ 990. $ 16,500 Complete this question by entering your answers in the taps Delow. Required 1 Required 2 What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2? Note: Round your intermediate calculations and final answers to whole dollars.. December 31 Income statement: Interest expense Balance Sheet: Bond liability Year 1 $ 719 Year 2 < Required 1 Required 2 > E10-15 (Air) Preparing a Bond Amortization Schedule for a Bond Issued at a Premium and Determining Report mounts LO10-5 On January 1 of this year, Houston Company issued a bond with a face value of $16,500 and a coupon rate of 6 percent. The bond matures in 3 years and pays interest every December 31. When the bond was issued, the annual market rate of interest was 5 percent. Houston uses the effective-interest amortization method. (FV of $1. PV of $1. FVA of $1, and PVA of $1) Note: Use appropriate factor(s) from the tables provided. Required: 1. Complete a bond amortization schedule for all three years of the bond's life. 2. What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Complete a bond amortization schedule for all three years of the bond's life. Note: Enter all values as positive values. Round your intermediate calculations and final answers to whole dollars. < Prev 4 of 4 Next Required 1 Required 2 Complete a bond amortization schedule for all three years of the bond's life. Note: Enter all values as positive values. Round your intermediate calculations and final answers to whole dollars. Date Cash Interest Interest Expense Book Value of Amortization Bond January 01, Year 1 December 31, Year 1 $ 990 December 31, Year 2 $ 990 December 31, Year 3 $ 990. $ 16,500 Complete this question by entering your answers in the taps Delow. Required 1 Required 2 What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2? Note: Round your intermediate calculations and final answers to whole dollars.. December 31 Income statement: Interest expense Balance Sheet: Bond liability Year 1 $ 719 Year 2 < Required 1 Required 2 >