Problem:

Bond contract rate = 7% semi-annual

Bond par = $10,000

Bond market rate = 6% semi-annual

Bond life = 10 years

1. Do the entry for the payment of cash interest per period (0.6 pts)
2. Do the entry for the amortization of the discount/premium per period (0.6pts)
3. Find total interest expense per period (0.3 pt)
4. Show the balance sheet presentation of the bond after two periods have elapsed (0.6 pts)