P10-12 Completing an Amortization Schedule (Effective-Interest Amortization) LO4
Berkley Corporation issued bonds and received cash in full for the issue price. The bonds
were dated and issued on January 1, 2009. The stated interest rate was payable at the end
of each year. The bonds mature at the end of four years. The following schedule has been
completed (amounts in thousands): Use the PV Table.
Required:
1.Complete the amortization schedule.
2.What was the maturity amount of the bonds?
3.How much cash was received at the date of the issuance (sale) of the bonds?
4.Was there a premium or a discount? If so, which and how much?
5.How much cash will be disbursed for interest each period and in total for the full life of the bond issue?
6.What method of amortization is being used?
7.What is the stated rate of interest?
8.What is the effective rate of interest?
9.What amount of interest expense should be reported on the income statement each year?
10.Show how the bonds should be reported on the balance sheet at the end of each year (show the last year immediately before retirement of the bonds).
Round present value factors to 4 decimal places. Round final answers to the nearest whole number. Omit the "$" and "%" signs in your response.
1.
Date Cash Interest Amortization Balance
January 1, 2009 $ 3,102
End of year 2009 $ 240$ 217$ 23 3,079
End of year 2010 240 216 24 3,055
End of year 2010 240 214 26 3029
End of year 2012 240 211 29 3000
2.The maturity amount of the bonds _____?$
3.Cash received at date of issuance (sale) of the bonds $_____?
4. The bonds were sold at a premium of _______$?
5.
Cash disbursed for interest $ ________?
Total interest on bond issue $ ______?
6.Effective-interest method
7.The stated rate of interest is _____?% .
8.The effective rate of interest is ______?% .
9.
2009 2010 2011 2012
Interest expense $ 217 216 214 211
10. Balance sheet 2009 2010 2011 2012
Long-Term Liabilities
Bonds payable $ 3079 3055 3029 3000
Berkley Corporation issued bonds and received cash in full for the issue price. The bonds
were dated and issued on January 1, 2009. The stated interest rate was payable at the end
of each year. The bonds mature at the end of four years. The following schedule has been
completed (amounts in thousands): Use the PV Table.
Required:
1.Complete the amortization schedule.
2.What was the maturity amount of the bonds?
3.How much cash was received at the date of the issuance (sale) of the bonds?
4.Was there a premium or a discount? If so, which and how much?
5.How much cash will be disbursed for interest each period and in total for the full life of the bond issue?
6.What method of amortization is being used?
7.What is the stated rate of interest?
8.What is the effective rate of interest?
9.What amount of interest expense should be reported on the income statement each year?
10.Show how the bonds should be reported on the balance sheet at the end of each year (show the last year immediately before retirement of the bonds).
Round present value factors to 4 decimal places. Round final answers to the nearest whole number. Omit the "$" and "%" signs in your response.
1.
Date Cash Interest Amortization Balance
January 1, 2009 $ 3,102
End of year 2009 $ 240$ 217$ 23 3,079
End of year 2010 240 216 24 3,055
End of year 2010 240 214 26 3029
End of year 2012 240 211 29 3000
2.The maturity amount of the bonds _____?$
3.Cash received at date of issuance (sale) of the bonds $_____?
4. The bonds were sold at a premium of _______$?
5.
Cash disbursed for interest $ ________?
Total interest on bond issue $ ______?
6.Effective-interest method
7.The stated rate of interest is _____?% .
8.The effective rate of interest is ______?% .
9.
2009 2010 2011 2012
Interest expense $ 217 216 214 211
10. Balance sheet 2009 2010 2011 2012
Long-Term Liabilities
Bonds payable $ 3079 3055 3029 3000