Determining the semiannual interest payment

Reference no: EM131820183

Question: Journalizing bond transactions using the effective-interest amortization method Journalize issuance of the bond and the first semiannual interest payment under each of the following three assumptions. The company amortizes bond premium and discount by the effective-interest amortization method. Explanations are not required.

1. Ten-year bonds payable with face value of $86,000 and stated interest rate of 14%, paid semiannually. The market rate of interest is 14% at issuance. The present value of the bonds at issuance is $86,000.

2. Same bonds payable as in assumption 1, but the market interest rate is 16%. The present value of the bonds at issuance is $77,594.

3. Same bonds payable as in assumption 1, but the market interest rate is 8%. The present value of the bonds at issuance is $121,028.

Reference no: EM131820183

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