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On January 1, 2018, Splash City issues $470,000 of 9% bonds, due in 20 years, with...

On January 1, 2018, Splash City issues $470,000 of 9% bonds, due in 20 years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 8%, the bonds will issue at $516,513. 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.

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Date Cash paid Interest expense Decrease in carrying value Carrying value
01-01-2018 516513
6-30-2018 21150 20661 -489 516024
12-31-2018 21150 20641 -509 515515
01-Jan-18 Cash 516513
         Bonds payable 470000
         Premium on bonds payable 46513
30-Jun-18 interest expense 20661 (516513*8%*6/12)
Premium on bonds payable 489
          Cash 21150 (470000*9%*6/12)
31-Dec-18 interest expense 20641 (516024*8%*6/12)
Premium on bonds payable 509
          Cash 21150 (470000*9%*6/12)
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