Chapter 1 Problem 12-11
Year Bond outstanding Fraction Premium amortization
2008 1,000,000 10/30 50,000
2009 800,000 8/30 40,000
2010 600,000 6/30 30,000
2011 400,000 4/30 20,000
2012 200,000 2/30 10,000
3,000,000 150,000
2008
Jan. 1 Held to maturity securities 1,000,000
Cash 1,000,000
June 30 Cash (100,000 x 12% x 6/12) 60,000
Interest income 60,000
Dec. 31 Cash 60,000
Interest income 60,000
31 Interest income 50,000
Held to maturity securities 50,000
31 Cash 200,000
Held to maturity securities 200,000
2009
June 30 Cash (800,000 x 12% x 6/12) 48,000
Interest income 48,000
Dec. 31 Cash 48,000
Interest income 48,000
31 Interest income 40,000
Held to maturity securities 40,000
31 Cash 200,000
Held to maturity securities 200,000
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