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On June 30, 2020, Crane Company issued $5,640,000 face value of 14%, 20-year bonds at $6,488,600,...

On June 30, 2020, Crane Company issued $5,640,000 face value of 14%, 20-year bonds at $6,488,600, a yield of 12%. Crane uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Show the proper balance sheet presentation for the liability for bonds payable on December 31, 2021, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.)

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Answer #1
Semi annual cash Interest = 5640,000*14%*6/12= 394800
Amort Chart
Period Cash Int Int. exp. Premium Unamort Carrying
amortized Premium Value of bonds
30.06.20 8,48,600 64,88,600
31.12.20 3,94,800 389316 5,484 8,43,116 64,83,116
30.06.21 3,94,800 388987 5,813 8,37,303 64,77,303
31.12.21 3,94,800 388638 6,162 8,31,141 64,71,141
Balance Sheet (31.12.21)
Long-term liabilities
Bonds payable -Gross 56,40,000
Less: Unamortized premium 8,31,141
Net Bonds payable 64,71,141
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