Premium amortization On the first day of the fiscal year, a company issues a $3,600,000 , 11%, 10-year bond that pays semiannual interest of $198,000 ($3,600,000 x 11% x 2) , receiving cash of $4,068,286. Using straight-line amortization, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense ✓ Premium on Bonds Payable Cash Feedback ✓ 198.000 Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
Premium amortization On the first day of the fiscal year, a company issues a $3,600,000 , 11%, 10-year bond that pays semiannual interest of $198,000 ($3,600,000 x 11% x 2) , receiving cash of $4,068,286. Using straight-line amortization, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense ✓ Premium on Bonds Payable Cash Feedback ✓ 198.000 Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
College Accounting, Chapters 1-27
23rd Edition
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:HEINTZ, James A.
Chapter22: Corporations: Bonds
Section: Chapter Questions
Problem 3MC
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![Premium amortization
On the first day of the fiscal year, a company issues a $3,600,000, 11%, 10-year bond that pays semiannual interest of $198,000 ($3,600,000 x 11% x 1/2), receiving cash of $4,068,286.
Using straight-line amortization, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Interest Expense
Premium on Bonds Payable
Cash
Feedback
▼ Check My Work
✓
198,000
Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over
the life of the bond.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdb44177a-f132-42e2-8071-3329a164275b%2Fe5d19208-e4aa-412f-a6b0-4e33b0756866%2Fn8xvr7c_processed.png&w=3840&q=75)
Transcribed Image Text:Premium amortization
On the first day of the fiscal year, a company issues a $3,600,000, 11%, 10-year bond that pays semiannual interest of $198,000 ($3,600,000 x 11% x 1/2), receiving cash of $4,068,286.
Using straight-line amortization, journalize the first interest payment and the amortization of the related bond premium. Round to the nearest dollar. If an amount box does not require an entry, leave it blank.
Interest Expense
Premium on Bonds Payable
Cash
Feedback
▼ Check My Work
✓
198,000
Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. The straight-line method of amortization provides equal amounts of amortization over
the life of the bond.
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