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Ike issues $200,000 of 9%, three-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. They are issued at $205,239. Their market rate is 8% at the issue date.

Required:
1.	Prepare the January 1, 2015, journal entry to record the bonds' issuance.

Journal Entry Worksheet

Record the issue of bonds with a par value of $200,000 cash on January 1, 2015 at an issue price of $205,239.

2.	Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.

Total bond interest expense over life of bonds:
Amount repaid:
	payments of
Par value at maturity
Total repaid
Less amount borrowed
Total bond interest expense

3.	Prepare an effective interest amortization table for the bonds' first two years. (Enter all amounts positive values.)

Semiannual Interest Period-End	Cash Interest Paid	Bond Interest Expense	Premium Amortization	Unamortized Premium	Carrying Value
01/01/2015
06/30/2015
12/31/2015
06/30/2016
12/31/2016

4.	Prepare the journal entries to record the first two interest payments.

Journal Entry Worksheet

Record the first interest payment on June 30, 2015.

Record the second interest payment on December 31, 2015.

5.	Prepare the journal entry to record the bonds' retirement on January 1, 2017, at 98.

Journal Entry Worksheet

Record the retirement of the bonds on January 1, 2017 at 98.

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