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Yutong's Company has a number of famous investors including Selena Gomez. On January 1 of this year, Yutong's Company issued a
bond with a face value of $16,000 and a coupon rate of 5 percent. The bond matures in 3 years and pays interest every December 31.
When the bond was issued, the annual market rate of interest was 4 percent. Yutong uses the effective-interest amortization method.
(EV of $1, PV of $1, EVA of $1, and PVA of $1) (Use the appropriate factor(s) from the tables provided. Round your final answers to
whole dollars.)
Required:
1. Complete a bond amortization schedule for all three years of the bond's life. (Enter all values as positive values.)
Cash
Date
Interest
Interest
Amortization
Book Value of
Jan 01, Year 1
Expense
Bond
Dec. 31, Year 1
Dec 31, Year 2
Dec 31, Year 3
2. What amounts will be reported on the income statement and balance sheet at the end of Year 1 and Year 2?
Year 1
Year 2
Interest expense
Bond liability
