Dashboard Technologies Ltd. issued bonds with a face value of $70 million that mature in 15 years. The bonds carry a 5.0% interest rate and are sold at 106.00 to yield 4.45%. The bonds pay interest semi-annually.

Required

a. Complete the first four payments of the bond amortization schedule below:

b. Why is the carrying value of the bonds at issuance not the same as the face value?

c. What is the carrying value of the liability for these bonds at the end of payment 4?

d. Show the journal entry to record payment 4 on these bonds. Ignore year-end accruals of interest.

Transcribed Image Text:

Carrying Value of Bonds Balance of Bond Premium Amortization of Interest Interest Payment Expense Bond Premium Date Issuance $4,200,000 $74,200,000 Payment 1 Payment 2 Payment 3 Payment 4