Question

Ho Spacing Heading 2 Heading I UUCc AaBbcc AaBbcc Heading 1 Paragraph On Jamary 1, 2019. Company C. issued five-year bonds with face value of $500,000 med coupon interest rate of 6%, with interest payable semi-annually. 1. Prepare a partial bond amortization table for the first two interest payments assuming that interest is paid on July 1 and January 1 and that the bonds sold based on the following scenario. 2. Record the journal entries relating to the bonds on January 1, July 1, and December 31 Market Rate 5% (Received $521,881 for the bond) Student's response to Q3 (only answers provided in box below will be marked) Semi- Interest Interest To Premium Unamortized annual Expense be Paid Amortization Premium Interest Periods Bond Carrying Amount Jan 1/ 2018 Jul 17 2018 Jan 1 2019 Tata Cantinha

Answer 1

1 Amortization table Effective-Interest Method Interest to be Premium paid Amortization Semi annual Interest interest periods expense at 2.5% Jan 1 2018 July 1, 2018 $13,047 Jan 1, 2019 $12,998 Unamortized Discount $21,881 $19,928 $17,926 Bond Carrying value $521,881 $519,928 $517,926 $15,000 $15,000 $1,953 $2,002 2 Credit Date Jan 1 2018 Debit $521,881 Account Titles and Explanation Cash Premium on Bonds payable Bond payable (To record issue of bonds) $21,881 $500,000 Credit Date July 1, 2018 Account Titles and Explanation Interest expense Premium on bonds payable Cash (To record interest paid) Debit $13,047 $1,953 $15,000 Credit Date Dec 31, 2018 Account Titles and Explanation Interest expense Premium on bonds payable Interest payable (To record interest accrued) Debit $12,998 $2,002 $15,000