COMPLETING A BOND AMORTIZATION TABLE (EFFECTIVE INTEREST RATE METHOD)
Cagney Company sold $200,000 of bonds on June 30, 2010. A portion of the amortiza- tion table appears below.
|
Period
|
Cash Payment (Credit)
|
Interest Expense (Debit)
|
Discount on Bonds Payable (Credit)
|
Discount on Bonds Payable Balance
|
Carrying Value
|
|
12/31/11
|
$9,000
|
$9,277
|
$277
|
$2,340
|
$197,660
|
|
6/30/12
|
9,000
|
9,290
|
290
|
2,050
|
197,950
|
|
12/31/12
|
?
|
?
|
?
|
?
|
?
|
Required:
1. Indicate the stated interest rate on these bonds.
2. Calculate the effective annual interest rate on these bonds (rounded to the nearest 0.1 percent).
3. Determine the interest expense and discount amortization for the interest period ending December 31, 2012.
4. Determine the liability balance after the interest payment is recorded on December 31, 2012.