On January 1, 2020, Rush Inc. prepared an amortization schedule for a bond issue. Mr. Martin, the CFO, wants to see just how much you know about accounting for bonds, and asks you to answer several questions about the amortization schedule:

Date	Stated interest	Market interest	Amortization amount	Bond carrying value
1/1/20				$9,298
12/31/20	$600	651	$51	9,349
12/31/21	600	658	54	9,403
12/31/22	600	658	58	9,461
12/31/23	600	662	62	9,523
12/31/24	600	667	67	9,590
12/31/25	600	671	71	9,661
12/31/26	600	676	76	9,737
12/31/27	600	682	82	9,819
12/31/28	600	687	87	9,906
12/31/29	600	694	94	10,000

1. What is the face amount of the bonds? What is the selling price of the bonds?

2. Were the bonds sold at a premium or discount or par? If there was a premium or discount, how much is it?

3. Are the bonds being amortized by straight-line or effective amortization method?

4. What is the stated rate of interest?

5. What is the market rate of interest?

6. What is the journal entry required on 12/31/27 based on this amortization schedule?

7. Why do the market interest amounts increase each year?