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Example 2: Charlie Co. issued $600,000 of 7% bonds on December 31, 2017 that are due in 10 years. Interest is paid on June 30

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Example 2: Charlie Co. issued $600,000 of 7% bonds on December 31, 2017 that are due in 10 years. Interest is paid on June 30 and December 31. Assuming that the bond was issued to yield 5%, prepare the journal entries to recognize the issuance of the bond on Dec. 31, 2017 and interest payment on June 30, 2018 and December 31, 2018. Complete the amortization table before you prepare the entries. Determining amounts in the amortization table: Determine Carrying Premium on B/P Face amount amount Formal (efficient) organization of the amortization table Interest Interest Amrt. of payment expense pense Prem. Dec 31, 2017 Jun 30, 2018 Dec 31, 2018 Jun 30, 2019 Dec 31, 2019 Jun 30, 2020 Jun 30, 2027 Dec 31, 2027 Dec 31, 2027 Journal entries: link Date Account titles and explanation Dec 31, 2017 Cash Premium on bonds payable Bonds payable 93.535 89.873 86.120 82.2731 78.330 74.288 5.854 (0) 600.000 600.000 600.000 600,000 600.000 600.000 600.000 600.000 P/R Credit Debit 693,535 600,000 93,535 June 30, 2018 Dec 31, 2018 Note: the entries for subsequent periods are omitted. Carrying amount of the bond on different dates can be summarized as follows: December 31, 2017 June 30, 2018 December 31, 2018 Bonds Payable $600,000 Bonds Payable $600,000 Premium on B/P 93,535 Carrying amount $693,535

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