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

question 10

Essay

On January 1,2018,a company sells a 3-year bond with a face value of $50,000 and a stated interest rate of 7%.Because the market interest rate is 5%,the company receives $52,723 for the bond.The company uses the effective interest method of amortization.Fill in Table
A.Fill in Table B assuming the market interest rate is 9%,and the company received only $47,469 for the bond and the company uses the effective interest method.
$$\begin{array}{l}\text { Table A }\\\begin{array} { | l | l | l | l | l | l | l | } \hline \begin{array} { c } \text { Period } \\\text { Ended }\end{array} & \begin{array} { l } \text { Interest } \\\text { Payable }\end{array} & \begin{array} { c } \text { Amortization } \\\text { of premium }\end{array} & \begin{array} { c } \text { Expense }\end{array} & \begin{array} { c } \text { Bonds } \\\text { Payable }\end{array} & \begin{array} { c } \text { Premium on } \\\text { Bonds } \\\text { Payable }\end{array} & \begin{array} { c } \text { Bonds } \\\text { Payable, } \\\text { Including } \\\text { Premiun }\end{array} \\\hline 01 / 01 / 18 & & & & & & \\\hline 12 / 31 / 18 & & & & & & \\\hline 12 / 31 / 19 & & & & & & \\\hline 12 / 31 / 20 & & & & & & \\\hline\end{array}\end{array}$$
$$\begin{array}{l}\text { Table B }\\\begin{array} { | c | c | c | c | c | c | c | } \hline \begin{array} { c } \text { Period } \\\text { Ended }\end{array} & \begin{array} { l } \text { Interest } \\\text { Payable }\end{array} & \begin{array} { c } \text { Amortization } \\\text { of Discount }\end{array} & \begin{array} { c } \text { Interest } \\\text { Expense }\end{array} & \begin{array} { c } \text { Bonds } \\\text { Payable }\end{array} & \begin{array} { c } \text { Discount on } \\\text { Bonds } \\\text { Payable }\end{array} & \begin{array} { c } \text { Bonds } \\\text { Payable, net of } \\\text { discount }\end{array} \\\hline 01 / 01 / 18 & & & & & & \\\hline 12 / 31 / 18 & & & & & & \\\hline 12 / 31 / 19 & & & & & & \\\hline 12 / 31 / 20 & & & & & & \\\hline\end{array}\end{array}$$

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