Chapter 1 Problem 12-13
Bond Months Peso Discount
Bond year outstanding outstanding months Fraction amortization
10/01/2008 – 02/01/2009 3,000,000 4 12,000,000 12/48 75,000
02/01/2009 - 02/01/2010 2,000,000 12 24,000,000 24/48 150,000
02/01/2010 – 02/01/2011 1,000,000 12 12,000,000 12/48 75,000
48,000,000 300,000
2008
Oct. 1 Held to maturity securities 2,700,000
Interest income (3,000,000 x 12% x 2/12) 60,000
Cash 2,760,000
Dec. 31 Accrued interest receivable 150,000
Interest income (3,000,000 x 12% x 5/12) 150,000
31 Held to maturity securities 56,250
Interest income (75,000 x 3/4) 56,250
2009
Jan. 1 Interest income 150,000
Accrued interest receivable 150,000
Feb. 1 Cash (3,000,000 x 12% x 6/12) 180,000
Interest income 180,000
1 Cash 1,000,000
Held to maturity securities 1,000,000
Aug. 1 Cash (2,000,000 x 12% x 6/12) 120,000
Interest income 120,000
Dec. 31 Accrued interest receivable 100,000
Interest income (2,000,000 x 12% x 5/12) 100,000
31 Held to maturity securities 156,250
Interest income 156,250
From January1 to February 1, 2009 (75,000 x 1/4) 18,750
From February 1 to December 31, 2009 (150,000 x 11/12) 137,500
Total amortization for year 2009 156,250
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