Refer to the bond details in Problem 14-1B, except assume that the bonds are issued at a price of $4,192,932.

Required

1. Prepare the January 1 journal entry to record the bonds’ issuance. 

2. For each semiannual period, compute 

(a) The cash payment, 

(b) The straight-line premium amortization, and 

(c) The bond interest expense. 

3. Determine the total bond interest expense to be recognized over the bonds’ life. 

4. Prepare the first two years of a straight-line amortization table like Exhibit 14.11. 

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

Exhibit 14.11

Data From Problem 14-1B

Romero issues $3,400,000 of 10%, 10-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,010,000.

Exhibit 14.7

Transcribed Image Text:

EXHIBIT 14.11 Semiannual Unamortized Carrying Period-End Premium Value Straight-Line Amortization of Bond Premium (0) 12/31/2021 ... $3,600 $103,600 (1) 6/30/2022 ... 2,700 102,700 (2) 12/31/2022 ... 1,800 101,800 (3) 6/30/2023 ... 900 100,900 During the bond life, carrying value is adjusted to par and the amortized premium to zero. (4) 12/31/2023 ... 100,000