Question

Cornerstone Exercise 9-30 (Algorithmic)
Debt Issued at a Premium (Straight Line)

On January 1, 2020, Ironman Steel issued $750,000, 8-year bonds for $795,000. The stated rate of interest was 4% and interest is paid annually on December 31.

Required:

Prepare the amortization table for Ironman Steel's bonds. If required, round your answers to nearest whole value. If an amount box does not require an entry, leave it blank and if the answer is zero, enter "0".

Ironman Steel
Amortization Table
Period	Cash Payment (Credit)	Interest Expense (Debit)	Premium on Bonds Payable (Debit)	Premium on Bonds Payable Balance	Carrying Value
At issue	$	$	$	$	$
12/31/20
12/31/21
12/31/22
12/31/23
12/31/24
12/31/25
12/31/26
12/31/27

Answer 1

Period	Cash Payment (Credit)	Interest Expense (Debit)	Premium on Bonds Payable (Debit)	Premium on Bonds Payable Balance	Carrying Value
At issue			[$795,000 - $750,000] = $45,000		$795,000
12/31/20	[$750,000 * 4 %] = 30,000	[30,000 - 5,625] = 24,375	[$45,000 / 8 years] = 5,625	[45,000 - 5,625] = 39,375	[795,000 - 5,625] =789,375
12/31/21	30,000	24,375	5,625	[39,375 - 5,625] = 33,750	[789,375 - 5,625] = 783,750
12/31/22	30,000	24,375	5,625	[33,750 - 5,625] = 28,125	[783,750 - 5,625] = 778,125
12/31/23	30,000	24,375	5,625	[28,125 - 5,625] = 22,500	[778,125 - 5,625] = 772,500
12/31/24	30,000	24,375	5,625	[22,500 - 5,625] = 16,875	[772,500 - 5,625] = 766,875
12/31/25	30,000	24,375	5,625	[16,875 - 5,625] = 11,250	[766,875 - 5,625] = 761,250
12/31/26	30,000	24,375	5,625	[11,250 - 5,625] = 5,625	[761,250 - 5,625] = 755,625
12/31/27	30,000	24,375	5,625	[5,625 - 5,625] = 0	[755,625 - 5,625] = 750,000