Question - Berj Corporation issued bonds and received cash in full for the issue price. The bonds were dated and issued on January 1, 2013. The coupon rate was payable at the end of each year. The bonds mature at the end of four years. The following schedule has been partially completed (amounts in thousands):
|
Date
|
Cash
Paid
|
Interest
Expense
|
Amortization
|
Carrying Amount
|
|
January 1, 2013
|
|
|
|
$7,319
|
|
End of year 2013
|
$612
|
$586
|
$26
|
7,293
|
|
End of year 2014
|
612
|
?
|
?
|
7,264
|
|
End of year 2015
|
612
|
?
|
?
|
?
|
|
End of year 2016
|
612
|
?
|
?
|
7,200
|
Required:
1. Complete the amortization schedule.
2. What was the maturity amount of the bonds?
3. How much cash was received at the date of issuance (sale) of the bonds?
4. What was the amount of discount or premium on the bond? (Enter your answer in thousands of dollars.)
5. How much cash will be disbursed in total for the full life of the bond issue?
6. What method of amortization is being used?
- Effective-interest method
- Straight-line method
- Deferred interest method
7. What is the coupon rate of interest?
8. What is the effective rate of interest?
9. What amount of interest expense should be reported on the statement of earnings each year? (2013, 2014, 2015, 2016)
10. Show how the bonds should be reported on the statement of financial position at the end of each year. (Enter your answers in thousands of dollars.)