amortization of a premium on bonds payable

From this the cash payment of 12,500, representing the interest paid to bondholders based on the par value of the bond and the bond rate (250,000 x 10 x 6/12 discount gym equipment packages 12,500 is deducted.
Each period, interest is charged on the opening book value of the bond at the market rate (8 so for example, in period 1 the interest is 259,075 x 8 x 6/12 10,363.
From the bond amortization schedule, we can see that at the end of period 4, the ending book value of the bond is increased to 250,000, and the discount on bonds payable (8,663) has been amortized to interest expense.
The final bond accounting journal would be to repay the par value of the bond with cash.This interest expense is then compared to the actual interest payment based on the face value of the bond and the bond rate, and the difference gives the amount to be amortized to the interest expense account.Bond Amortization Schedule (Discount) The bond amortization schedule is produced as follows Bond amortization schedule when code promo le blanc la redoute bond issued at a discount Interest Payment Balance Discount 0 241,337 1 14,480 12,500 243,317 1,980 2 14,599 12,500 245,416 old vic under 25 promo code 2,099 3 14,725 12,500 247,642 2,225 4 14,858 12,500.This leaves a ending balance which is the book value of the bond carried forward to the next period.Interest, payment, balance, premium 0 259,075 1 10,363 12,500 256,938 2,137 2 10,278 12,500 254,715 2,222 3 10,189 12,500 252,404 2,311 4 10,096 12,500 250,000 2,404 40,925 50,000 9,075 The table starts with the book value of the bond which is the face value (250,000).Bond amortization schedule final journal Account Debit Credit Cash 250,000 Bonds payable 250,000 Total 250,000 250,000 An identical process is followed if the bonds are issued at a discount as the following example shows.For example, in period 1, the posting of the actual interest paid and the premium amortization shown in the bond amortization schedule is as follows: Bond amortization schedule period 1 journal entry Account Debit Credit Cash 12,500 Interest expense 12,500 Interest expense 2,137 Premium.Bond Amortization Schedule (Premium the bond amortization schedule is produced as follows.Bonds payable are issued by a business to raise finance.Bond Amortization Schedule Effective Interest Method June 17th, 2017Team You May Also Like Posted By: Team Tutorials Bonds Payable June 17, 2017.Bonds Payable Issued at a Premium.The effective interest method involves preparing a bond amortization schedule to calculate the interest expense based on the market rate at the time the bond was issued and the bonds book value.Account, debit, credit, cash 259,075, bonds payable 250,000, premium on bonds payable 9,075, total 259,075 259,075, the premium on bonds payable account has a credit balance of 9,075 which needs to be amortized to the interest expense account over the lifetime of the bond.The actual semi-annual cash interest payments on the bond are of course based on the face value of the bond (250,000) and the bond discount rate (10).Bond amortization schedule when bond issued at a premium.Every six months the amount of 250,000 x 10 x 6/12 12,500 will be paid in cash to the bond holders.For example, in period 1, the posting of the actual interest paid and the discount amortization shown in the bond amortization schedule is as follows: Bond amortization schedule period 1 journal entry Account Debit Credit Cash 12,500 Interest expense 12,500 Interest expense 1,980 Discount.The actual semi-annual cash interest payments on the bond are as before based on the face value of the bond (250,000) and the bond discount rate (10).


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