Question

On January 1, 2018, Splash City issues $350,000 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 $382,187.

Required:

1. Complete the first three rows of an amortization table.

2. Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

1
Date	Cash paid	Interest expense	Decrease in Carrying value	Carrying value
1/1/18				382187
6/30/18	14000	13377	623	381564
12/31/18	14000	13355	645	380919
2
Jan 1 2018	Cash	382187
	Bonds payable		350000
	Premium on Bonds payable		32187
June 30 2018	Interest expense	13377
	Premium on Bonds payable	623
	Cash		14000
Dec 31 2018	Interest expense	13355
	Premium on Bonds payable	645
	Cash		14000