Life Fitness Ltd. is authorized to issue $6,000,000 of 5 percent, 10-year bonds. On January 2, 2017,

Question:

Life Fitness Ltd. is authorized to issue $6,000,000 of 5 percent, 10-year bonds. On January 2, 2017, the contract date, when the market interest rate is 6 percent, the company issues $4,800,000 of the bonds and receives cash of $4,442,941. Interest is paid on June 30 and December 31 each year. Life Fitness Ltd. amortizes bond discounts by the effective-interest method.

Required

1. Prepare an amortization table for the first four semi-annual interest periods. Follow the format of Panel B in Exhibit 15-5 on page 852.

2. Record the issue of the bonds on January 2, the first semi-annual interest payment on June 30, and the second payment on December 31.

3. Show the balance sheet presentation of the bond on the date of issue and on December 31, 2018.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...