II. Calculate Interest received and interest revenue III. Prepare joumal entries for a and b 1. Prepare the amotisation schedule using the table below Date Cash Effective Increase in Outstanding Interest (a) Interest (b) Balance (c) Balance (d) 46,649 46.974 4,649 4,974 666,414 671.063 676,037 1/7/2018 31/12/2018 30/6/2019 31/12/2019 30/6/2020 31/12/2020 30/6/2021 42,000 42,000 42.000 42.000 42.000 42,000 Calculating the effective interest - Outstanding balance at the beginning of the period x market interest rate (a) = Stated interest rate x face value = 6% x 700,000 = 42.000 (b) = Outstanding balance at the beginning of the period x market interest rate 31/12/2018 = 666,414 x 7% = 46,649 30/6/2019 = 671,063 x 7% = 46974 (C) - (b) - (a) (That is Effective interest - cash interest (d)* current period outstanding balance + next period increase in balance note for the first period it is always = the calculated market value or bond price) g