COMPLETING A BOND AMORTIZATION TABLE (EFFECTIVE INTEREST RATE METHOD)

MacBride Enterprises sold $200,000 of bonds on December 31, 2011. A portion of the amortization table appears below.

Period Cash Payment

(Credit)

Interest Expense

(Debit)

Premium on Bonds Payable

(Debit)

Premium on Bonds Payable Balance Carrying Value At issue $6,457 $206,457 6/30/12 $9,000 $8,465 $535 5,922 205,922 12/31/12 9,000 8,443 557 5,365 205,365 6/30/13 9,000 8,420 580 4,784 204,785 12/31/13 ? ? ? ? ?

Required:

. Indicate the stated annual interest rate on these bonds.

. Calculate the effective annual interest rate on these bonds (rounded to the nearest 0.1 percent).

. Determine the interest expense and premium amortization for the interest period ending December 31, 2013.

. Determine when the bonds will mature.

Exercise