Question: Presented below is a partial amortization schedule for Premium Pizza. 1. Record the bond issue assuming the face amount of bonds payable is $70,000. 2.

Presented below is a partial amortization schedule for Premium Pizza.

(1) (2) Cash Paid (3) Interest (4) Decrease in (5) Carrying Value Period for Interest Expense Carrying Value Issue date $76,860 1 $2,450 $2,306 $144 76,716 2 2,450 2,301 149 76,567

1. Record the bond issue assuming the face amount of bonds payable is $70,000.

2. Record the first interest payment.

3. Explain why interest expense decreases each period.

(1) (2) Cash Paid (3) Interest (4) Decrease in (5) Carrying Value Period for Interest Expense Carrying Value Issue date $76,860 1 $2,450 $2,306 $144 76,716 2 2,450 2,301 149 76,567

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