Assume that on January 1, 2018, Co issued ten-year bonds with a face value of $5

Question

Assume that on January 1, 2018, Co issued ten-year bonds with a face value of $5,000,000 and a stated interest rate of 10 % , payable semi annualy on My and ianuary 1. The bonds were sold to yeld 12 Assume that the issue price was $4,420,000, Prepare the amortization table for 2018, assuming that amortization is recorded on interest payment dates using the effectiveinterest

method

amortization is recorded on interest payment dates using the effective-interest method. Amortization Schedule Cash Paid Interest Expense Amortization Carrying Amount 1/1/2018 7/1/2018 1/1/2019 A. Record the journal entry of the interest payment and/or accrued interest at 1//1/2018 (if applica Date Journal Entry Debit Credit 01/01/18 Interest ExPense Record the journal entry of the interest payment and/or accrued interest at 7/1/2018 (if applic Date Journal Entry 07/01/18 Debit Credit Record the journal entry of the interest payment and/or accrued interest at 12/31/2018 (if ap Date Journal Entry Debit Credit 12/31/18

Explanation / Answer

Amotization Tabble: Date Cash paid Interest Amortization Carrying Amount Expense 01.01.2018 4,420,000 01.07.2018. 250000 265200 15200 4,435,200 01.01.2019 250000 266112 16112 4,451,312 Req A: No entry on jan 1 2018 for interest. Req B: 07.01.2018 Interest expense Dr. 265200       Cash Account 250000       Discount on issue of Bonds payable 15200 Req C: 31.12.2018 Interest expense Dr. 266112       Cash Account 250000       Discount on issue of Bonds payable 16112

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