Homework Answers
Interest Expense for the six months July 1- December 31, 2019 = $ 3,234
Explanation:
| Schedule of Interest Revenue and Bond Premium Amortization | ||||
| Effective Interest Method | ||||
| Date | Cash Paid(a) | Interest Expense (b) | Premium Amortized(a-b) | Carrying Amount of Bonds |
| Jan. 1, 2019 | $ 108,530 | |||
| Jan.1 To June. 30,2019 | $ 4,000 | $ 3,256 | $ 744 | $ 107,786 |
| July,1 To Dec. 31,2019 | $ 4,000 | $ 3,234 | $ 766 | $ 107,019 |
| Jan.1 To June. 30,2020 | $ 4,000 | $ 3,211 | $ 789 | $ 106,230 |
| July,1 To Dec. 31,2020 | $ 4,000 | $ 3,187 | $ 813 | $ 105,417 |
| Jan.1 To June. 30,2021 | $ 4,000 | $ 3,163 | $ 837 | $ 104,579 |
| July,1 To Dec. 31,2021 | $ 4,000 | $ 3,137 | $ 863 | $ 103,717 |
| Jan.1 To June. 30,2022 | $ 4,000 | $ 3,112 | $ 888 | $ 102,828 |
| July,1 To Dec. 31,2022 | $ 4,000 | $ 3,085 | $ 915 | $ 101,913 |
| Jan.1 To June. 30,2023 | $ 4,000 | $ 3,057 | $ 943 | $ 100,971 |
| July,1 To Dec. 31,2023 | $ 4,000 | $ 3,029 | $ 971 | $ 100,000 |
Notes:
1) Interest Expense = Carrying Value of Bonds * Market Rate = $ 107,786 * 3% = $ 3,234
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