Determine what interest expense for the bond issue

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Reference no: EM13940994

USING A PREMIUM AMORTIZATION TABLE (STRAIGHT LINE)

For Dingle Corporation, the following amortization table was prepared when $400,000 of five-year, 7 percent bonds were sold on December 31, 2008, for $420,000.

Period	Cash Payment (Credit)	Interest Expense (Debit)	Premium on Bonds Payable (Debit)	Premium on Bonds Payable Balance	Carrying Value
At issue				$20,000	$420,000
6/30/09	$14,000	$12,000	$2,000	18,000	418,000
12/31/09	14,000	12,000	2,000	16,000	416,000
6/30/10	14,000	12,000	2,000	14,000	414,000
12/31/10	14,000	12,000	2,000	12,000	412,000
6/30/11	14,000	12,000	2,000	10,000	410,000
12/31/11	14,000	12,000	2,000	8,000	408,000
6/30/12	14,000	12,000	2,000	6,000	406,000
12/31/12	14,000	12,000	2,000	4,000	404,000
6/30/13	14,000	12,000	2,000	2,000	402,000
12/31/13	14,000	12,000	2,000	0	400,000

Required:

1. Prepare the entry to recognize the issuance of the bonds on December 31, 2008.

2. Prepare the entry to recognize the first interest payment on June 30, 2009.

3. Determine what interest expense for this bond issue Dingle will report in its 2010 income statement.

4. Indicate how these bonds will appear in Dingle's December 31, 2012, balance sheet.

Reference no: EM13940994

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