Thomson Co. produces and distributes semiconductors for use by computer manufacturers. Thomson Co. issued $780,000 of 10-year, 5% bonds on May 1 of the current year at face value, with interest payable on May 1 and November 1. The fiscal year of the company is the calendar year.

Journalize the entries to record the following selected transactions for the current year.

Dec.

31

Recorded accrued interest for two months.

2) Journalize the entry to record the first interest payment on October 1, 2016, and amortization of bond premium for six months, using the straight-line method. The bond premium amortization is combined with the semiannual interest payment. (Round to the nearest dollar.) For a compound transaction, if an amount box does not require an entry, leave it blank.

Interest Expense

The following data were taken from recent annual reports of Caliber Company, which operates a low-fare airline service to more than 50 cities in the United States:

	Current Year		Preceding Year
Interest expense	$76,000		$83,000
Income before income tax	334,400		240,700

a. Determine the times interest earned ratio for the current and preceding years. Round to one decimal place.

Current year

Preceding year

Times interest earned

The following data were taken from recent annual reports of Caliber Company, which operates a low-fare airline service to more than 50 cities in the United States:

	Current Year		Preceding Year
Interest expense	$76,000		$83,000
Income before income tax	334,400		240,700

a. Determine the times interest earned ratio for the current and preceding years. Round to one decimal place.

Current year

Preceding year

On January 1, Year 1, Bryson Company obtained a $69,000, four-year, 9% installment note from Campbell Bank. The note requires annual payments of $21,298, beginning on December 31, Year 1.

a. Prepare an amortization table for this installment note, similar to the one presented in Exhibit 4.

Note: Round the computation of the interest expense to the nearest whole dollar. Enter all amounts as positive numbers. In Year 4, round the amount in the Decrease in Notes Payable column either up or down to ensure that the Carrying Amount zeroes out.

Year Ending December 31	January 1 Carrying Amount			Note Payment (Cash Paid)			Interest Expense (9% of January 1 Note Carrying Amount)					Decrease in Notes Payable			December 31 Carrying Amount
Year 1	$			$			$					$			$
Year 2
Year 3
Year 4															0
				$			$					$

b. Journalize the entries for the issuance of the note and the four annual note payments.

Note: For a compound transaction, if an amount box does not require an entry, leave it blank. For the Year 4 entry (due to rounding), adjust Notes Payable up or down to ensure that debits equal credits.

Year 1 Jan. 1
Year 1 Dec. 31
Year 2 Dec. 31
Year 3 Dec. 31
Year 4 Dec. 31