Silk Company issued $500,000 of 6%, 10-year bonds on one of its interest dates for...
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Accounting
Silk Company issued $500,000 of 6%, 10-year bonds on one of its interest dates for $431,850 to yield an effective annual rate of 8%. The effective-interest method of amortization is to be used. Interest is paid annually. What amount of discount (to the nearest dollar) should be amortized for the first interest period?
$14,089
$6,815
$9,096
$4,548
Presented here is a partial amortization schedule for Roseland Company who sold $200,000, five year 10% bonds on January 1, 2012 for $208,000 and uses annual straight-line amortization.
BOND AMORTIZATION SCHEDULE
Interest Period
Interest Paid
Interest Expense
Premium Amortization
Unamortized Premium
Bond Carrying Value
January 1, 2012
$8,000
$208,000
January 1, 2013
(i)
(ii)
(iii)
(iv)
(v)
Which of the following amounts should be shown in cell (ii)?
$21,600
$18,400
$20,800
$19,200
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