On January 1,2018,a Company Sells a 3-Year Bond with a Face

question 105

Essay

On January 1,2018,a company sells a 3-year bond with a face value of $200,000 and a stated interest rate of 8%.Because the market interest rate is lower,the company receives $209,000 for the bond.Fill in Table A assuming the company uses the straight-line method of amortization.Fill in Table B assuming the company received only $194,000 for the bond and used the straight-line method of amortization.
Table A
$\begin{array}{|l|l|l|l|l|l|l|}\hline \begin{array}{l}\text { Period } \\\text { Ended }\end{array} & \begin{array}{l}\text { Interest } \\\text { Payable }\end{array} & \begin{array}{l}\text { Amortization } \\\text { df premium }\end{array} & \begin{array}{l}\text { Interest } \\\text { Expense }\end{array} & \begin{array}{l}\text { Bonds } \\\text { Payable }\end{array} & \begin{array}{l}\text { Premium on } \\\text { Bonds } \\\text { Payable }\end{array} & \begin{array}{l}\text { Bonds } \\\text { Payable, } \\\text { including } \\\text { Premium }\end{array} \\\hline 01 / 01 / 18 & & & & & & \\\hline 12 / 31 / 18 & & & & & & \\\hline 12 / 31 / 19 & & & & & & \\\hline 12 / 31 / 20 & & & & & & \\\hline\end{array}$

Table B
$\begin{array}{|l|l|l|l|l|l|l|}\hline \begin{array}{l}\text { Period } \\\text { Ended }\end{array} & \begin{array}{c}\text { Interest } \\\text { Payable }\end{array} & \begin{array}{c}\text { Amortization } \\\text { of Discount }\end{array} & \begin{array}{c}\text { Interest } \\\text { Expense }\end{array} & \begin{array}{c}\text { Bonds } \\\text { Payable }\end{array} & \begin{array}{c}\text { Discount on } \\\text { Bonds } \\\text { Payable }\end{array} & \begin{array}{c}\text { Bonds } \\\text { Payable, net of } \\\text { discount }\end{array} \\\hline 01 / 01 / 18 & & & & & & \\\hline 12 / 31 / 18 & & & & & & \\\hline 12 / 31 / 19 & & & & & & \\\hline 12 / 31 / 20 & & & & & & \\\hline\end{array}$
.

---

Definitions:

Ethical Values

Principles that govern the behavior of an individual or organization, often reflecting what is deemed as morally right or acceptable.

Formalized Rules

Officially established regulations and procedures that are defined and enforced by an organization or institution to guide behavior and operations.