Straight Line Bond Premium Amortization Terms and Definitions When a bond sells for more than its face amount, the difference between the selling price and the face amount is called a __________. A bond discount or premium must be amortized to interest expense The straight line method amortizes equal amounts of bond discount/premium to interest expense each period. Amortization the contract rate of interest to a rate of interest that approximates the market rate. Understanding the Business Transaction Bonds sell at a premium when the market rate of interest is than the contract rate of interest. Premium amortization is the amount of cash merest paid, causing the amount of interest expense reported in the income statement to be the amount of cash Interest paid on a bond. On the first day of the fiscal year, Jill Company issues exist4, 467,000, 14%, 10-year bonds for cash of exist4, 713, 112 when the market rate of interest was 13%. The bonds pay interest semi-annually on June 30 and December 31. Determine (1) the premium on bonds payable at the date of issuance, (2) the semi-annual cash interest payment, (3) the semi-annual premium amortization using the straight line method, and (4) the semi-annual interest expense. Round your answers to the nearest whole dollar amount. Selling Price of Bonds exist Face Value or Bonds Premium on Bonds Payable exist Semi-annual Cash interest payment exist Semi-annual Premium amortization Semi-annual Interest expense exist