Ike issues $120,000 of 11%, three-year bonds dated January 1, 2017, that pay int
ID: 2539528 • Letter: I
Question
Ike issues $120,000 of 11%, three-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $123,044. Their market rate is 10% at the issue date.
Record the issue of bonds with a par value of $120,000 cash on January 1, 2017 at an issue price of $123,044.
Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
Prepare an effective interest amortization table for the bonds' first two years.
Record the first interest payment on June 30, 2017.
Record the second interest payment on December 31, 2017.
Record the retirement of the bonds on January 1, 2019 at 98.
Explanation / Answer
Amortization schedlue
To record the issue of bonds Date Account Title Debit Credit Jan.1,2017 Cash 123044 Bond Premium 3044 Bond Payable 120000