Night Owl Distributors Ltd. was authorized to issue $500,000 of 12% bonds on January 1, 2015. On this date, the corporation issued $200,000 of bonds for $210,152. The market rate of interest was 10%. Interest is paid semi-annually on June 30 and December 31.
Required:
1. Calculate the amount of interest paid every interest payment date.
2. Complete the amortization table below using the effective interestmethod of amortization.

3. Using the following table, calculate the interest percentage under the effective interest method of amortization for each six-month period.

4. Comment on the interest percentage that results in each period. Do you think that this should remain constant from period to period? Why or why not?

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(A-D) (B-C) Ending Periodic bond interest premium carrying id amortization amount Using 10% market rate to calculate Beginning bond carrying amount $210,152 SIX-mon as interest expense Year endin of 10% 5%) x A (5% x $210,152) (5% x (5% x (596x (596x (596x 2015 $10,507 Jun, 30 Dec. 31 2016 Jun. 30 Dec. 31 2017 Jun. 30 Dec. 31 Using 10% market rate to calculate six-month interest expense Six month period ending Jun. 30 Dec. 31 Jun. 30 Dec. 31 Jun. 30 Dec. 31 Beginning bond carrying amount $210,152 Interest (14 of 1096 :596] x A) (5% x $210,152+ ) $10,507 (5% x ( 5% x (596x ( 596x (5% x ear 2015 2016 2017