PROBLEM THREE $400,000 4% bonds are issued at 97.67708575 for $390,708.34 when the market rate for similar bonds is 5%. Regular interest payments are June 30th and December 31st each year. Complete the amortization schedule. A B Interest Interest June 30, Payment Face x Face Interest x Time 400,000 x .04 x 6/12 Expense Amortization Balance Difference A and B Carrying Discount Value CV x Market Interest x Time CV x .05 x 6/12 20x1 8,000.00 9,767.71 1,767.71 7,523.95 9,291.66 390,708.34 + 1,767.71 392,476.05 + 1,811.90 Dec. 31, 20x1 8,000.00 9,811.90 1,811.90 5,712.05 394,287.95 June 30, 20x2 Dec. 31, 20x2 June 30, 20x3 49,291.66 Cash Discount on bond Bond payable To record the issuance Interest expense Discount on bond Cash To record the first interest payment and amortize the discount Interest expense Premium on bond Cash To record the second interest payment and amortize the discount 390,708.34 9,291.66 400,000.00 9,767.71 1,767.71 8,000.00 9,811.90 1,811.90 8,000.00