Question

Check my work Required information The following information applies to the questions displayed below] On January 1, 2021, Splash City issues $430,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 7%, the bonds will issue at $469,544 Required: 1. Complete the first three rows of an amortization table. (Round your final answers to the nearest whole dollar.) Decrease in Carrying Carrying Date Interest Expense Cash Paid Value Value 1/1/21 6/30/21 12/31/21 < Prey 6 7 of 13 !! Next POTUITOS 006 Cara 10

Answer 1

1. Prepare amortization schedule as follows: 1 2 3 4 А в E Date Cash paid Interest expense Decrease in Carrying value Carrying value 1/1/2021 | $469,544 6/30/2021 $17,200 $16,434 $766 $468,778 12/31/2021 $17,200 $16,407 $793 $467,985 Calculate values in above table as follows: А в 1 Date Cash paid Interest expense Decrease in Carrying value Carrying value 2 44197 469544 3 44377 =430000*4%=E2*3.5% =B3-C3 =E2-D3 4 44561 =430000*4%=E3*3.5% =B4-C4 =E3-D4

Prepare journal entries as follows: B D Credit 1 Date General Journal Debit 3 1-Jan Cash Bond payable Premium of bonds payable (To record issue of bonds) $469,544 $430,000 $39,544 $16,434 $766 $17,200 8 30-Jun Interest expense Premium on bonds payable Cash (To record interest) 12 13 31-Dec Interest expense 14 Premium on bonds payable 15 Cash 16 (To record interest) $16,407 $793 $17,200

Calculate values in above table as follows: A Date C Debit D Credit 1 General Journal 469544 43831 Cash Bond payable Premium of bonds payable (To record issue of bonds) 430000 =C3-D4 16434 =D10-C8 8 44012 Interest expense Premium on bonds payable Cash (To record interest) 17200 12 13 44196 Interest expense 14 Premium on bonds payable Cash 16 |(To record interest) 16407 =D15-C13 17200 15