Homework Answers
Answer
--Journal entry
| Accounts title | Debit | Credit |
| Interest Expense | $12,045 | |
| Premium on Bonds Payable | $1,095 | |
| Cash ($438000 x 6% x 6/12) | $13,140 |
--Workings
| A | Issue Price | $459,900 |
| B | Face value | $438,000 |
| C = A - B | Premium on Bonds payable | $21,900 |
| D | No. of years | 10 |
| E = D x 2 | No. of semi annual payments | 20 |
| F = C/E | Straight Line amortisation of Premium | $1,095 |
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