Ruby CPA –

I’ve attached a picture of the example from the book. Thanks

Now assume that for the bond issue by Evermaster Corporation (page 771), investors are willing to accept an effective-interest rate of 6 percent. In that case, they would pay $108,530 or a premium of $8,530, computed as follows.

Now assume that for the bond issue by Evermaster Corporation (page 771), investors are willing to accept an effective-interest rate of 6 percent. In that case, they would pay $108,530 or a premium of $8,530, computed as follows.

Maturity value of bonds payable

Present value of $100,000 due in 5 years at 6%, interest payable semiannually (Table 6-2); FV(PVF10,3%); ($100,000 3 .74409) = $74,409

Present value of $4,000 interest payable semiannually for 5 years at $100,000 = 108,530

Premium on Bonds Payable $8,530

I understand that and how to record the issuance of the bond

Dr Cash 108,530

Cr Premium on Bonds Payable 8,530

Cr Bonds Payable

You would Dr Discount on Bonds Payable

Evermaster records the first interest payment on July 1, 2014, and amortization of the premium as follows.

Dr Interest Expense 3,256

Dr Premium on Bonds Payable 744

Cr Cash 4,000

I understand that, You Multiply the FV of 108,530 * .03% .03 since its paid semi annually and the effective interest rate is .06

Are you able to write/draw the t charts (Sorry, i may have called them tables) showing each step for the 1st payment up to the the last payment? The amortization table will take to long when I do my final, and I really want to learn using the t charts. Thanks RubyCpaMba

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