Effective Interest Amortization On January 1, Raines, Inc., issued $450,000 of 6%, 15-year bonds for $387,000, yielding an effective interest rate of 8%. 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 January 1. c. Prepare the journal entry to record the bond interest payment and discount amortization at June 30. d. Prepare the journal entry to record the bond interest payment and discount amortization at December 31. a.

Year	Interest Period	Interest Paid	Interest Expense	Periodic Amortization	Balance of Unamortized Discount	Book Value of Bonds End of Period
at issue
1	1
	2

General Journal
Date	Description	Debit	Credit
b.
Dec.31	Cash
	CashDiscount on Bonds PayableBonds PayableBond Interest Expense
	CashDiscount on Bonds PayableBonds PayableBond Interest Expense
	To record issuance of bonds.
c.
Jun.30	CashDiscount on Bonds PayableBonds PayableBond Interest Expense
	CashDiscount on Bonds PayableBonds PayableBond Interest Expense
	Cash
	To record semiannual interest payment and discount amortization.
d.
Dec.31	CashDiscount on Bonds PayableBonds PayableBond Interest Expense
	CashDiscount on Bonds PayableBonds PayableBond Interest Expense
	Cash
	To record semiannual interest payment and discount amortization.

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