Question

Bonds Issued at a Discount (Effective Interest) Sicily Corporation issued $1,000,000 in 8% bonds (payable on December 31, 2029) on January 1, 2020, for $940,000. Interest is paid on June 30 and December 31. The market rate of interest is 11%. Required: Prepare the amortization table through December 31, 2021, using the effective interest rate method. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0". If required, round your answers to the nearest whole dollar. Sicily Corporation Amortization Table Period Cash Payment (Credit) Interest Expense (Debit) Discount on Bonds Payable (Credit) Discount on Bonds Payable Balance Carrying Value At issue $ $ $ $ $ 6/30/20 12/31/20 6/30/21 12/31/21

Answer 1

Amortization table
Date	Cash	Income	Amortization	Carrying amount
	(1,000,000*4%)	(Carrying amount * 5.5%)	(Expense-Cash)
1/1/2020				940,000
6/30/2020	40,000	51,700	11,700	951,700
12/31/2020	40,000	52,344	12,344	964,044
6/30/2021	40,000	53,022	13,022	977,066
12/31/2021	40,000	53,739	13,739	990,805