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On January 1, Year 1, a company issues $520,000 of 5% bonds, due in 15 years, with interest payable annually on December 31 each year.

Assuming the market interest rate on the issue date is 6%, the bonds will issue at $469,499.

Required:
1. Complete the first three rows of an amortization schedule.

Answer 1

Date	Interest Payment	Interest Expense	Amortization of Bond Discount	Balance in Bond Discount	Balance of Bonds Payable	Book Value of Bonds Payable
Jan 1, Year 1				$     50,501.00	$ 5,20,000.00	$ 4,69,499.00
Dec 31, Year 1	$     26,000.00	$     28,169.94	$       2,169.94	$     48,331.06	$ 5,20,000.00	$ 4,71,668.94
Dec 31, Year 2	$     26,000.00	$     28,300.14	$       2,300.14	$     46,030.92	$ 5,20,000.00	$ 4,73,969.08
Dec 31, Year 3	$     26,000.00	$     28,438.14	$       2,438.14	$     43,592.78	$ 5,20,000.00	$ 4,76,407.22

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