Reference no: EM132585612

Otter Products Inc. issued bonds on January 1, 2019. Interest is to be paid semi-annually. Other information is as follows: Term in years: Face value of bonds issued: Issue price: Specified interest rate each payment period: $200,000 S206,000 6%

Required

Question 1: Calculate a. The amount of interest paid in cash every payment period. b. The amount of amortization to be recorded at each interest payment date (use the straight-line method).

Question 2: amortization table by calculating interest expense, and beginning and ending bond carrying amounts at the end of each period over three years. Amortization Table Ending bond Period Beg bond Periodicual Periodic cash carrying interest (prem.) expense paid Year carrying amort 2019 Jun. 30 Dec. 31 Jun. 30 Dec. 31 Jun. 30 Dec. 31 2020 2021

Question 3: Calculate the actual interest rate under the straight-line method of amortization for each six-month period. Round all percentage calculations to two decimal placed.

Use the following format Bond Six-month Six month period ending crying interest expense

Year 2019 2020 2021 (B/A) Jun. 30 Dec. 31 Jun. 30 Dec. 31 Jun. 30 Dec. 31 4

Question 4: Prepare the journal entry for December 31, 2019.