Straight-Line Method

MacBride Enterprises sold $200,000, 9% bonds for $206,457 on December 31, 2013. The bonds pay semi-

annual interest each June 30 and December 31 and mature December 31, 2018.

1. Record the issuance of the bonds on December 31, 20

2. If MacBride uses the straight-line amortization method to record bond amortization and interest

expense, what entry would they make at the first interest payment on June 30, 2014?

3. Complete the bond amortization table below (Straight-line method)

Period	Cash payment for interest (credit)	Interest Expense (Debit)	Premium on Bonds Payable (Debit)	Balance in the premium on bonds payable account	carrying value of the bonds (face +balance in premium account)
6/30/2014
12/31/2014
6/30/2015
12/31/2015
6/30/2016
12/31/2016
6/30/2017
12/31/2017
6/30/2018
12/31/2018

Effective Interest Method

MacBride Enterprises sold $200,000, 9% bonds for $206,457 on December 31, 2013. The bonds pay semi-

annual interest each June 30 and December 31 and mature December 31, 2018. The effective interest rate on

the bonds is 8.2%

4. Record the issuance of the bonds on December 31, 2013.

5. If MacBride uses the effective interest amortization method to record bond amortization and interest

expense, what entry would they make at the first interest payment on June 30, 2014?

6. What entry would be made at the second interest payment date on December 31, 2014?

Period	cash payment for interest (credit)	interest expense (debit)	premium on bonds payable (debit)	balance in the premium on bonds payable account	carrying values of the bonds (face + balance in premium account)
6/30/2014
12/31/2014
6/30/2015
12/31/2015
6/30/2016
12/31/2016
6/30/2017
12/31/2017
6/30/2018
12/31/2018