Riverbed Company sells 10% bonds having a maturity value of $1,400,000 for $1,299,071. The bonds are dated January 1, 2017, and mature on January 1, 2022. Interest is payable annually on January 1.
Set up a schedule of interest expense and discount amortization under the straight-line method. (Round answers to 0 decimal places, e.g. 38,548.)
Schedule of Discount Amortization Straight-Line Method
Year Cash Interest Discount Expense Amortized Carrying Amount of Bonds
Jan. 1, 2017 $1,400,000 $0 $0 $1,400,000
Jan. 1, 2018 $1,400,000 $140,000 $112,857 $1,287,143
Jan. 1, 2019 $1,400,000 $140,000 $112,857 $1,174,286
Jan. 1, 2020 $1,400,000 $140,000 $112,857 $1,061,429
Jan. 1, 2021 $1,400,000 $140,000 $112,857 $948,572
Jan. 1, 2022 $1,400,000 $140,000 $112,857 $835,715