Effective Interest Amortization

On December $31,$ Caper, Inc., issued $$300,000$ of $8\%,9-$year bonds for $$288,000,$ yielding an effective interest rate of $10\%.$ Semiannual interest is payable on June $30$ and December $31$ each year. The firm uses the effective interest method to amortize the discount.

Required

a$.$ Prepare an amortization schedule showing the necessary information for the first two interest periods. Round amounts to the nearest dollar.

b$.$ Prepare the journal entry for the bond issuance on December $31.$

c$.$ Prepare the journal entry to record the bond interest payment and discount amortization at June $30$ of the following year.

d$.$ Prepare the journal entry to record the bond interest payment and discount amortization at December $31$ of the following year.

a$.$

Year

Interest

Period

Interest

Paid Interest

Expense

Periodic

Amortization

Balance

of Unamortized

Discount Book Value

of Bonds

End of Period

at issue Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

$11$ Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

$2$ Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

Answer

$0$

General Journal

Date Description Debit Credit

b$.$

Dec$\mathrm{.}31$ Cash Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

To record issuance of bonds.

c$.$

Jun$\mathrm{.}30$ Answer

Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Cash Answer

$0$

Answer

$0$

To record semiannual interest paymentand discount amortization.

d$.$

Dec$\mathrm{.}31$ Answer

Answer

$0$

Answer

$0$

Answer

Answer

$0$

Answer

$0$

Cash Answer

$0$

Answer

$0$

To record semiannual interest paymentand discount amortization.