On January 1, 2013, Global Satellites issued $1.4-million, 10-year bonds. The bonds pay semi-annual interest on July 1 and January 1, and Global has a December 31 year end. A partial bond amortization schedule is presented below:

Instructions
(a) Were the bonds issued at a premium or a discount?
(b) Fill in the missing amounts for [1] through [5].
(c) What is the face value of the bonds?
(d) What is the contractual rate of interest?
(e) What was the market interest rate when the bonds were issued?
(f) Record the issue of the bonds on January 1, 2013.
(g) Record the interest payment on July 1, 2014.
(h) Record the accrual of interest on December 31, 2014.
(i) What amounts would be reported as current and non-current in the liabilities section of Global's December 31, 2014, balance sheet?
(j) Record the interest payment on January 1, 2015.
(k) Assuming, immediately aft er the interest payment the bonds were redeemed on January 1, 2015, when the market interest rate was 5%, calculate the amount Global paid to redeem the bonds.
(l) Record the redemption of the bonds on January 1, 2015.
Taking It Further
Why would Global's board of directors not have set the contractual interest rate at the market interest rate on the date of issue when it authorized the bond issue?

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Semi-Annual Bond Iinterest PeriodI Interest PaymentInterest Expense AmortizationAmortized Cost January 1, 2013 July 1, 2013 January 1, 2014 July 1, 2014 January 1, 2015 July 1, 201:5 January 1, 2016 $1,300,514 1,304,032 1,307,673 1,311,442 $12] 45,641 $3,518 3,641 45,900 46,037 46,178 2,000 4,037 4,178 1,319,379 1,323,557 A2,000