Question

On January 1, 2018, Splash City issues $350,000 of 8% bonds, due in 15 years, with...

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.)

Homework Answers

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
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