On January 1 2018 Splash City issues 500000 of 9 bonds due i

On January 1, 2018, Splash City issues $500,000 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 $549,482. value: Required information 1.25 points Required: 1. Complete the first three rows of an amortization table. Interest Expense Carrying Value Carrying Value Decrease in Date Cash Paid 6/30/18 12/31/18

Solution

Amortization Tabale Date Cash paid Interest Decrease in Carrying value Expense Carrying amount 01.01.18 549482 30.06.18 22500 21979 521 548961 31.12.18 22500 21958 542 548419 Journal entries Date Accounts title and explanations Debit $ Credit $ Jan 1 18 Cash Account Dr. 549482        Bonds payable 500000        Premium on Bonds payable 49482 June30 18 Interest expense Account Dr. 22979 Premium on Bonds payable Dr. 521       Cash account 22500 Dec31 18 Interest expense Account Dr. 21958 Premium on Bonds payable Dr. 542       Cash account 22500