EXERCISE 10-20 BOND INTEREST AND PREMIUM OR DISCOUNT AMORTIZATION Assume that S200.000 of Baker School District 6% bonds are sold on the bond issue date for S185.~88. Interest is payable semiannually, and the bonds mature in 10 years.

The purchase price provides a return of "% on the investment.

1. NXTiat entries would be made on the investor's books for the receipt of the first 2 interest payments, assuming premium or discount amortization on each interest date by

(a) the straight-line method and (h) the effective-interest method? (Roimd to the nearest dollar.)

2. What entries would be made on Baker School Districts books to record the first 2 interest payments, assuming premium or discount amortization on each interest date by

(a) the straight-line method and (h) the effective-interest method? (Hound to the nearest dollar.)