required information\nproblem 14 - 4a (algo) straight - line: amortization of bond discount lo p2\nthe…

required information\nproblem 14 - 4a (algo) straight - line: amortization of bond discount lo p2\nthe following information applies to the questions displayed below.\nlegacy issues $680,000 of 6.5%, four - year bonds dated january 1, 2021, that pay interest semiannually on june 30 and december 31. they are issued at $645,669 when the market rate is 8%.\nproblem 14 - 4a (algo) part 3\n3. prepare a straight - line amortization table for the bonds first two years.\nnote: round your intermediate and final answers to the nearest whole dollar.

required information\nproblem 14 - 4a (algo) straight - line: amortization of bond discount lo p2\nthe following information applies to the questions displayed below.\nlegacy issues $680,000 of 6.5%, four - year bonds dated january 1, 2021, that pay interest semiannually on june 30 and december 31. they are issued at $645,669 when the market rate is 8%.\nproblem 14 - 4a (algo) part 3\n3. prepare a straight - line amortization table for the bonds first two years.\nnote: round your intermediate and final answers to the nearest whole dollar.

Answer

Explanation:

Step1: Calculate bond discount

The face - value of the bonds is $F = 680000$ and the issue price is $P=645669$. The bond discount $D$ is $D = F - P=680000 - 645669 = 34331$.

Step2: Determine the number of periods

The bonds have a 4 - year term with semi - annual interest payments. So the total number of periods $n=4\times2 = 8$.

Step3: Calculate the semi - annual amortization amount

The semi - annual amortization amount $A$ of the bond discount is $A=\frac{D}{n}=\frac{34331}{8}=4291.375\approx4291$.

Step4: Fill in the amortization table

For 01/01/2021:

  • Unamortized discount: The initial unamortized discount is the total bond discount, so it is $34331$.
  • Carrying value: The issue price, so it is $645669$.

For 06/30/2021:

  • Unamortized discount: $34331 - 4291=30040$.
  • Carrying value: $645669+4291 = 649960$.

For 12/31/2021:

  • Unamortized discount: $30040 - 4291 = 25749$.
  • Carrying value: $649960+4291=654251$.

For 06/30/2022:

  • Unamortized discount: $25749 - 4291 = 21458$.
  • Carrying value: $654251+4291=658542$.

For 12/31/2022:

  • Unamortized discount: $21458 - 4291 = 17167$.
  • Carrying value: $658542+4291=662833$.
Semiannual Period - End Unamortized Discount Carrying Value
01/01/2021 34331 645669
06/30/2021 30040 649960
12/31/2021 25749 654251
06/30/2022 21458 658542
12/31/2022 17167 662833

Answer:

Semiannual Period - End Unamortized Discount Carrying Value
01/01/2021 34331 645669
06/30/2021 30040 649960
12/31/2021 25749 654251
06/30/2022 21458 658542
12/31/2022 17167 662833