Unit 4 Assignment 5 Amortization Method

Prepare transactions according to the Generally Accepted Accounting Principles.

Account for various transactions using industry-standard accounting software.

This assignment will help the student better understand how the Effective Interest Method functions.

Straight Line vs Effective Interest Amortization Methods Par Ranger Co. Issues bonds dated January 1, information about the bonds is below. Interestis paid semiannually on June 30 and December 31. *50.000 Rate Term Market Rate TOP Is Price 9113 Semiannual interest 51.000 1. What is the amount of the premium on these bonds at issuance? Issue Price Per premium amortized per period 2. How much total bond interest expense will be recognized over the life of these bonds? Total Bond Interest Expense Over Life of Bonds: Amount repaid: I payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense 3. Prepare a straight-line amortization table for these bonds. Unamortized Premium Carrying Value Semiannual Interest Period End 1/1 yr 1 6/30 yr 1 1/1 y 2 6/30 y 2 1/1 y 3 6/30 yr 3 12/31 y 3 Unamorized Pem Carrying Value Pald 3. Prepare an effective Interest: amortization of these bonds Semiannual Cash Interest Bond Interest Premium Interest Expense Amortization Period-End I 1/1 y 1 630 v 11 1/1 yr 2 6/30 y 2 1/1/ 3 6/30 y 3 12/31 yr 3 Total