Jones Inc. issued $400,000 of 8-percent, 10-year bonds payable at a price of 114.88 on May 31, 2014. The market interest rate at the date of issuance was 6 percent, and the Jones Inc. bonds pay interest semiannually.
The effective-interest amortization table for the bond premium is presented here for the first two interest periods.

1. How much cash did Jones Inc. receive upon issuance of the bonds payable?
2. Continue the effective-interest amortization table for the bond premium for the next two interest payments. Round amounts to the nearest dollar.
3. Record issuance of the bonds on May 31, 2014, and on November 30, 2015, payment of the third semiannual interest amount and amortization of the bond premium. Explanations are not required.

Transcribed Image Text:

Amortization Table Unamortized Premium Account Balance (Previous D - Current C) End of Interest Payment (4% of Interest Expense (3% of Preceding Premium Amortization Bond Carrying Amount ($400,000 + D) $459,520 457,306 455,025 Semiannual Interest Period Maturity Value) Bond Carrying Amount (A - B) May 31, 2014 Nov. 30, 2014 May 31, 2015 $16,000 16,000 $13,786 13,719 $2,214 2,281 $59,520 57,306 55,025