Question

On January 1, 2021, a company issues $750,000 of 6% bonds, due in six years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 5%, the bonds will issue at $788,467.

Required:
a. Fill in the blanks in the amortization schedule below:

On January 1, 2021, a company issues $750,000 of 6% bonds, due in six years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 5%, the bonds will issue at $788,467.

Required:
a. Fill in the blanks in the amortization schedule below:

Date Cash Paid Interest Expense Change in Carrying Value Carrying Value

1/1/2021

6/31/2021

12/31/2021

b. Record the bond issue on January 1, 2021, and the first two semi-annual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest dollar amount.)

Answer 1

a) Amortization table

Date	Cash paid	Interest expense	Change in Carrying value	Carrying value
1/1/2021				788467
06/30/2021	750000*3% = 22500	788467*2.5% = 19712	2788	785679
12/31/2021	22500	19642	2858	782821

Journal entry

Date	General Journal	Debit	Credit
Jan 1	Cash	788467
	Bonds payable		750000
	Premium on bonds payable		38467
June 30	Interest expense	19712
	Premium on bonds payable	2788
	Cash		22500
Dec 31	Interest expense	19642
	Premium on bonds payable	2858
	Cash		22500