A. On July 1, 20x1, PQR company issues 12%, 10-year bonds with a maturity value of $450,000. Interest will be paid semi-annually (Jan. 1 and July 1). The market interest rate is 9%, and the issue price of the bonds is 115. PQR company amortizes bonds by the effective interest method.

1) Complete the following amortization table. Do not show any calculations. For EACH calculation, round to the NEAREST dollar. (3 pts)

Date	Interest payment	Interest expense	amortization	Unamortized Premium balance	Bond carrying amount
At issuance
The 1st interest
The 2nd interest
The 3rd interest
The 4th interest

2) Show your calculations AND explanation for the unamortized premium balance and the bond carrying amount at issuance. (2 pts)

Unamortized premium balance
Bond carrying amount

3) Show your calculations AND explanation for the interest payment, interest expense, amortization, the unamortized premium balance and the bond carrying amount for the 1^st and 2^nd interests. (3 pts)

	1st interest	2nd interest
Interest payment
Interest expense
amortization
Unamortized premium balance
Bond carrying amount

4) Journalize the 1^st interest accrual on Dec.31, 20x1 based on your amortization table. If your entry does not match with the amortization table, it will be considered wrong. (2 pts)

B. On July 1, 20x1, XYZ company issues 9%, 5-year bonds with a maturity value of $450,000. Interest will be paid semi-annually (Jan. 1 and July 1). The market interest rate is 10%, and the issue price of the bonds is 95. XYZ company amortizes bonds by the effective interest method.

1) Complete the following amortization table. Do not show any calculations. For EACH calculation, round to the NEAREST dollar. (3 pts)

Date	Interest payment	Interest expense	amortization	Unamortized Discount balance	Bond carrying amount
At issuance
The 1st interest
The 2nd interest
The 3rd interest
The 4th interest

2) Show your calculations AND explanation for the unamortized discount balance and the bond carrying amount at issuance. (2 pts)

Unamortized discount balance
Bond carrying amount

3) Show your calculations AND explanation for the interest payment, interest expense, amortization, the unamortized discount balance and the bond carrying amount for the 1^st and 2^nd interests. (3 pts)

	1st interest	2nd interest
Interest payment
Interest expense
amortization
Unamortized discount balance
Bond carrying amount

4) Journalize the 1^st interest accrual on Dec.31, 20x1 based on your amortization table. If your entry does not match with the amortization table, it will be considered wrong. (2 pts)