**Bond Amortization and Issuance**On June 30, 2018, the market rate of interest is 9%. Ramsey Corporation issues $550,000 of 12%, 20-year bonds payable at $701,813. The bonds pay interest on June 30 and December 31. The company amortizes bond premium using the effective interest method.a. **Prepare a Bond Amortization Table for the First 6 Years of the Bond Term**To prepare this table, follow these steps using the effective interest method:- Calculate interest expense for each period.- Determine the premium amortization.- Adjust the carrying amount of the bonds accordingly.b. **Record the Issuance of the Bond Payable on June 30, 2018, the Payment of Interest on December 31, 2018, and June 30, 2019**1. Record the initial issuance at $701,813, noting the bond premium.2. Record interest payments twice yearly, calculating the interest expense based on the market rate and adjusting the premium. By performing these calculations and adjustments, you will accurately reflect the financial impact of the bond issuance on Ramsey Corporation's accounts.

Bonds can be issued at par, at premium or at discount. The interest payment on bonds is made…

2. On June 30, 2018 the market rate of interest Is 9%. Ramsey Cor issues$550,000 of 12%, 20 year bonds payable at $701,813. The bonds pay interest on June 30 and December 31. The company amortizes bond premium using the effective interest method. a. Prepare a bond amortization table for the first 6 years of the bond term b. Record the issuance of the bond payable on June 30, 2018, the payment of interest on Dec. 31, 2018 and June 30, 2019

2. On June 30, 2018 the market rate of interest Is 9%. Ramsey Cor issues$550,000 of 12%, 20 year bonds payable at $701,813. The bonds pay interest on June 30 and December 31. The company amortizes bond premium using the effective interest method. a. Prepare a bond amortization table for the first 6 years of the bond term b. Record the issuance of the bond payable on June 30, 2018, the payment of interest on Dec. 31, 2018 and June 30, 2019

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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