The following information relates to a $100,000, 5-year, 6% bond issued by South Bend Inc. The bonds, issued on 1/1/2018, are due on 1/1/2023 and pay interest on January 1st (annual payments). At the issuance of the bond, prevailing market interest rate was 8%.

Use

PV of $1 Annuity: 5 years, 8% = 3.993 PV of $1: 5 years, 8% = 0.681

a.) Calculate the price of the bond at issuance (or the proceed from sale of the bonds) and the amount of bond premium. ANSWER: $92,058

b.) Prepare an amortization schedule for South Bend Inc. using the effective interest method to amortize bond premium/discount

ANSWER

Year	Coupon	Interest	Amoritization	Coupon Value
		(coupon value x 8%)	(interest-coupon)	(add amoriz.value to previous coupon amt)
0				92,058
1	6,000	7,364.64	1,364.64	93,422.64
2	6,000	7,473.8112	1,473.8112	94,896.4512
3	6,000	7,591.7161	1,591.7161	96,488.1673
4	6,000	7,719.0534	1,719.0534	98,207.2207
5	6,000	7,856.5777	1,856.5777	100,063.7984*

*Should equal bond price (100,000) but due to rounding it's a bit higher

c.) Please record an adjusting journal entry as of 12/31/2018 to recognize interest expense and premium/discount amortization and a journal entry as of 1/1/2019 to record interest payment. HELP!!!