Copyright © 2016 Pearson Education, Inc.
20–10
SOLUTIONS TO SET A PROBLEMS
PROBLEM 20A-1
(1)
Period
Carrying Value,
Beginning of
Period
Total Interest
Expense
Interest Paid to
Bondholders
(Semiannual Rate x
Face Value)
Amortized Discount
Transferred to Increase
Interest Expense
Carrying Value, End
of Period
1
$388,000
$20,600
$20,000
$600
$388,600
2
388,600
20,600
20,000
600
389,200
3
389,200
20,600
20,000
600
389,800
(2)
a. Jan.
1
Cash
388
0
0
0
00
Discount on Bonds Payable
12
0
0
0
00
Bonds Payable
400
0
0
0
00
b. Jun.
30
Bond Interest Expense
20
6
0
0
00
Discount on Bonds Payable
6
0
0
00
Cash
20
0
0
0
00
Dec.
31
Bond Interest Expense
20
6
0
0
00
Discount on Bonds Payable
6
0
0
00
Cash
20
0
0
0
00
c. Dec.
31
Bond Interest Expense
13
7
3
3
00
Discount on Bonds Payable
4
0
0
00
Bond Interest Payable
13
3
3
3
00
PROBLEM 20A-2
LANCE CORPORATION
AMORTIZATION SCHEDULE
Period
Carrying Value,
Beginning of
Period
Interest Paid
to
Bondholders
Interest Expense
Recorded
Premium to Be Amortized
Carrying Value, End
of Period
1
$1,030,000
$45,000
$44,250
$750
$1,029,250
2
1,029,250
45,000
44,250
750
1,028,500
3
1,028,500
45,000
44,250
750
1,027,750
May
1
Cash
1,030
0
0
0
00
Premium on Bonds Payable
30
0
0
0
00
Bonds Payable
1,000
0
0
0
00
Nov.
1
Bond Interest Expense
44
2
5
0
00
Premium on Bonds Payable
7
5
0
00
Cash
45
0
0
0
00
Dec.
31
Bond Interest Expense
14
7
5
0
00
Premium on Bonds Payable
2
5
0
00
Bond Interest Payable
15
0
0
0
00
PROBLEM 20A-3
(1)
FISH CORPORATION
AMORTIZATION SCHEDULE
Period
Carrying Value,
Beginning of
Period
Interest Paid
to
Bondholders
Interest Expense to
be Recorded
Discount to Be Amortized
Carrying Value, End
of Period
1
$267,192.00
$16,511.00
$17,367.48
$856.48
$268,048.48
2
268,048.48
16,511.00
17,423.15
912.15
268,960.63
3
268,960.63
16,511.00
17,482.44
971.44
269,932.07
(2)
a. Jan.
1
Cash
267
1
9
2
00
Discount on Bonds Payable
33
0
0
8
00
Bonds Payable
300
2
0
0
00
b. Jul.
1
Bond Interest Expense
17
3
6
7
48
Discount on Bonds Payable
8
5
6
48
Cash
16
5
1
1
00
Dec.
31
Bond Interest Expense
17
4
2
3
15
Discount on Bonds Payable
9
1
2
15
Cash
16
5
1
1
00
(3)
Dec.
31
Bond Interest Expense
11
6
1
5
43
Discount on Bonds Payable
6
0
8
10
Bond Interest Payable
11
0
0
7
33
PROBLEM 20A-4
(1)
LEXINGTON CORPORATION
AMORTIZATION SCHEDULE
Period
Carrying Value,
Beginning of
Period
Interest Paid to
Bondholders
(Semiannual Rate
x Face Value)
Interest Expense
Recorded
Premium to Be Amortized
Carrying Value, End
of Period
1
$194,679.00
$9,000.00
$7,787.16
$1,212.84
$193,466.16
2
193,466.16
9,000.00
7,738.65
1,261.35
192,204.81
3
192,204.81
9,000.00
7,688.19
1,311.81
190,893.00
(2)
a. May
1
Cash
194
6
7
9
00
Premium on Bonds Payable
14
6
7
9
00
Bonds Payable
180
0
0
0
00
b. Nov.
1
Bond Interest Expense
7
7
8
7
16
Premium on Bonds Payable
1
2
1
2
84
Cash
9
0
0
0
00
c. Dec.
31
Bond Interest Expense
2
5
7
9
55
Premium on Bonds Payable
4
2
0
45
Bond Interest Payable
3
0
0
0
00
Copyright © 2016 Pearson Education, Inc.
20–14
SOLUTIONS TO SET B PROBLEMS
PROBLEM 20B-1
(1)
LANGSTON CORPORATION
AMORTIZATION SCHEDULE
Period
Carrying Value,
Beginning of
Period
Total Interest
Expense
Interest Paid to
Bondholders
(Semiannual Rate x
Face Value)
Amortized Discount
Transferred to Increase
Interest Expense
Carrying Value, End
of Period
1
$436,500
$20,925
$20,250
$675
$437,175
2
437,175
20,925
20,250
675
437,850
3
437,850
20,925
20,250
675
438,525
(2)
a. Jan.
1
Cash
436
5
0
0
00
Discount on Bonds Payable
13
5
0
0
00
Bonds Payable
450
0
0
0
00
b. Jun.
30
Bond Interest Expense
20
9
2
5
00
Discount on Bonds Payable
6
7
5
00
Cash
20
2
5
0
00
Dec.
31
Bond Interest Expense
20
9
2
5
00
Discount on Bonds Payable
6
7
5
00
Cash
20
2
5
0
00
c. Dec.
31
Bond Interest Expense
10
4
6
3
00
Discount on Bonds Payable
3
3
8
00
Bond Interest Payable
10
1
2
5
00
PROBLEM 20B-2
LANCE CORPORATION
AMORTIZATION SCHEDULE
Period
Carrying Value,
Beginning of
Period
Interest Paid
to
Bondholders
Interest Expense
Recorded
Premium to Be Amortized
Carrying Value, End
of Period
1
$918,000
$67,500
$67,050
$450
$917,550
2
917,550
67,500
67,050
450
917,100
3
917,100
67,500
67,050
450
916,650
May
1
Cash
918
0
0
0
00
Premium on Bonds Payable
18
0
0
0
00
Bonds Payable
900
0
0
0
00
Nov.
1
Bond Interest Expense
67
0
5
0
00
Premium on Bonds Payable
4
5
0
00
Cash
67
5
0
0
00
Dec.
31
Bond Interest Expense
22
3
5
0
00
Premium on Bonds Payable
1
5
0
00
Bond Interest Payable
22
5
0
0
00
PROBLEM 20B-3
(1)
AUSTIN CORPORATION
AMORTIZATION SCHEDULE
Period
Carrying Value,
Beginning of
Period
Interest Paid
to
Bondholders
Interest Expense to
be Recorded
Discount to Be Amortized
Carrying Value, End
of Period
1
$252,958.00
$16,549.50
$17,707.06
$1,157.56
$254,115.56
2
254,115.56
16,549.50
17,788.09
1,238.59
255,354.15
3
255,354.15
16,549.50
17,874.79
1,325.29
256,679.44
(2)
a. Jan.
1
Cash
252
9
5
8
00
Discount on Bonds Payable
47
9
4
2
00
Bonds Payable
300
9
0
0
00
b. July
1
Bond Interest Expense
17
7
0
7
06
Discount on Bonds Payable
1
1
5
7
56
Cash
16
5
4
9
50
Dec.
31
Bond Interest Expense
17
7
8
8
09
Discount on Bonds Payable
1
2
3
8
59
Cash
16
5
4
9
50
(3)
Dec.
31
Bond Interest Expense
11
8
5
8
73
Discount on Bonds Payable
8
2
5
73
Bond Interest Payable
11
0
3
3
00
PROBLEM 20B-4
(1)
PLIMPTON CORPORATION
AMORTIZATION SCHEDULE
Period
Carrying Value,
Beginning of
Period
Interest Paid to
Bondholders
(Semiannual Rate
x Face Value
Interest Expense
Recorded
Premium to Be Amortized
Carrying Value, End
of Period
1
$227,126.00
$10,500
$9,085.04
$1,414.96
$225,711.04
2
225,711.04
10,500
9,028.44
1,471.56
224,239.48
3
224,239.48
10,500
8,969.58
1,530.42
222,709.06
(2)
a. Apr.
1
Cash
227
1
2
6
00
Premium on Bonds Payable
17
1
2
6
00
Bonds Payable
210
0
0
0
00
b. Oct.
1
Bond Interest Expense
9
0
8
5
04
Premium on Bonds Payable
1
4
1
4
96
Cash
10
5
0
0
00
c. Dec.
31
Bond Interest Expense
4
5
1
4
22
Premium on Bonds Payable
7
3
5
78
Bond Interest Payable
5
2
5
0
00