Exercise 17-5 (Part Level Submission)
On January 1, 2013, Phantom Company acquires $320,800 ofSpiderman Products, Inc., 9% bonds at a price of $297,685. Theinterest is payable each December 31, and the bonds mature December31, 2015. The investment will provide Phantom Company a 12.00%yield. The bonds are classified as held-to-maturity.
Prepare a 3-year schedule ofinterest revenue and bond discount amortization, applying thestraight-line method. (Round answers to 0 decimalplaces, e.g. 2,500.)
Schedule of Interest Revenue and Bond DiscountAmortizationStraight-line MethodBond Purchased to Yield
Date
CashReceived
InterestRevenue
Bond DiscountAmortization
Carrying Amountof Bonds
1/1/13
$
12/31/13
$
$
$
12/31/14
12/31/15
Prepare a 3-year schedule ofinterest revenue and bond discount amortization, applying theeffective-interest method. (Round answers to 0 decimalplaces, e.g. 2,500.)
Schedule of Interest Revenue and Bond DiscountAmortizationEffective-Interest MethodBond Purchased to Yield
Date
CashReceived
InterestRevenue
Bond DiscountAmortization
Carrying Amountof Bonds
1/1/13
$
12/31/13
$
$
$
12/31/14
12/31/15
*
* Difference due to rounding
(c)
Prepare the journal entry forthe interest receipt of December 31, 2014, and the discountamortization under the straight-line method.
(d)
Prepare the journal entry forthe interest receipt of December 31, 2014, and the discountamortization under the effective-interest method.
(Round answers to 0 decimal places, e.g. 2,500. Creditaccount titles are automatically indented when amount is entered.Do not indent manually. If no entry is required, select “No Entry”for the account titles and enter 0 for the amounts.)
No.
Date
Account Titles and Explanation
Debit
Credit
(c)
December 31, 2014
(d)
December 31, 2014
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