Refer to the bond details in Problem 14-4B.

Required

1. Compute the total bond interest expense over the bonds' life.

2. Prepare an effective interest amortization table like the one in Exhibit 14B.2 for the bonds' life.

3. Prepare the journal entries to record the first two interest payments.

4. Use the market rate at issuance to compute the present value of the remaining cash flows for these bonds as of December 31, 2019. Compare your answer with the amount shown on the amortization table as the balance for that date (from part 2) and explain your findings.

Exhibit 14B.2

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Bonds: $100,000o Par Value, Semiannual Interest Payments, Two-Year Life, 6% Semiannual Contract Rate, 5% Semiannual Market Rate (B) (D) (E) (A) (C) Cash Bond Semiannual Interest Interest Premium Unamortized Carrying Interest Paid Expense Amortization Premium Value 6% x $100,000 5% x Prior (E Period-End $100,000 + (D) (A) – (B) Prior (D) – (C) 7 (0) $3,546 $103,546 12/31/2017 $ 6,000 $ 823 864 (1) $ 5,177 102,723 6/30/2018 2,723 (2) 12/31/2018 1,859 6,000 101,859 5,136 10 (3) (4) 6/30/2019 6,000 5,093 907 952 100,952 952 11 12/31/2019 6,000 5,048 100,000 $24,000 $20,454 $3,546 12