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Question
Explain how each of the columns in an amortization schedule is calculated, assuming the bonds are issued at a discount. How is the amortization schedule different if bonds are issued at a premium?
Answer
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General Investment Co. (GIC) purchased bonds on January 1, 2015. GIC's accountant has projected the following amortization schedule from purchase until maturity: Date
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Carrying Value 1/1/15 $194,758 6/30/15
$7,000
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$790
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When using the equity method to account for an investment, cash dividends received by the investor from the investee should be recorded:
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d. Future value of an annuity
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790 Income Statement Data Sales
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77 Tax Expense
32 Net Income
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Interest Expense [($30,000 - $554.55) x 6% x 1/12]
23 Notes Payable (difference)
557.32 Cash (monthly payment) 704.55 (to record the second monthly payment)
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Interest Expense ($30,000 x 6% x 1/12)
00 Notes Payable (difference)
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85,730 2
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