FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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At the beginning of his current tax year, David invests $12,840 in original issue U.S. Treasury bonds with a $10,000 face value that mature in exactly 20 years. David receives $580 in interest ($290 every six months) from the Treasury bonds during the current year, and the yield to maturity on the bonds is 3.8 percent.

Note: Round your intermediate calculations to the nearest whole dollar amount.

a. How much interest income will he report this year if he elects to amortize the bond premium?

 

### Bond Amortization Schedule

This table represents a bond amortization schedule over the course of two semiannual periods.

#### Table Columns:

1. **Semiannual Period**: This column identifies each semiannual period. There are two periods listed:
   - Period 1
   - Period 2

2. **Adjusted Basis of Bond at Beginning of Semiannual Period**: This column is intended to show the adjusted basis of the bond at the start of each semiannual period. Currently, it is empty, indicating no data has been entered for either period.

3. **Interest Received**: This column is for tracking the interest received during each semiannual period. The cells for both periods are empty, with a total of $0 indicating no interest has been recorded.

4. **Premium Amortization**: This column accounts for any amortization of the bond premium over each period. The cells are empty, with a total of $0 for both periods, showing no premium amortization has been noted.

5. **Reported Interest**: This final column is for the reported interest. Again, both cells are empty, and the total amount is $0, suggesting no reported interest for the year.

#### Yearly Total:

At the bottom of the table is a "Yearly Total" row. It shows the cumulative totals for "Interest Received," "Premium Amortization," and "Reported Interest," all of which are currently $0.

This table is often used in financial education to illustrate how bond amortization schedules are laid out and calculated, though actual values need to be filled in for meaningful analysis.
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Transcribed Image Text:### Bond Amortization Schedule This table represents a bond amortization schedule over the course of two semiannual periods. #### Table Columns: 1. **Semiannual Period**: This column identifies each semiannual period. There are two periods listed: - Period 1 - Period 2 2. **Adjusted Basis of Bond at Beginning of Semiannual Period**: This column is intended to show the adjusted basis of the bond at the start of each semiannual period. Currently, it is empty, indicating no data has been entered for either period. 3. **Interest Received**: This column is for tracking the interest received during each semiannual period. The cells for both periods are empty, with a total of $0 indicating no interest has been recorded. 4. **Premium Amortization**: This column accounts for any amortization of the bond premium over each period. The cells are empty, with a total of $0 for both periods, showing no premium amortization has been noted. 5. **Reported Interest**: This final column is for the reported interest. Again, both cells are empty, and the total amount is $0, suggesting no reported interest for the year. #### Yearly Total: At the bottom of the table is a "Yearly Total" row. It shows the cumulative totals for "Interest Received," "Premium Amortization," and "Reported Interest," all of which are currently $0. This table is often used in financial education to illustrate how bond amortization schedules are laid out and calculated, though actual values need to be filled in for meaningful analysis.
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