Question: PREPARING AN AMORTIZATION TABLE FOR A ZERO COUPON BOND (STRAIGHT LINE) On December 31, 2009, Georgetown Distributors borrowed $2,180,000 by issuing four-year, zero coupon bonds.

PREPARING AN AMORTIZATION TABLE FOR A ZERO COUPON BOND (STRAIGHT LINE)

On December 31, 2009, Georgetown Distributors borrowed $2,180,000 by issuing four-year, zero coupon bonds. The face value of the bonds is $3,000,000. Georgetown uses the straight-line method to amortize any premium or discount.

Required:

Prepare an amortization table for these bonds, using the following column headings:

Period Cash Payment

(Credit)

Interest Expense

(Debit)

Discount on Bonds Payable

(Credit)

Discount on Bonds Payable Balance Carrying Value

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