Chapter 11 - Practice Problems Problem #2 - Bonds sold at Premium A company issued the below bonds on January 1, 2018. Round all answers to two decimal points ($5.95). Face Amount Contract Rate $ 2,680,000 4% Semi-annual interest payments 20 years Term of bonds Market Rate Selling Price 2,5% 3,150,000 $ 1) Prepare the journal entry for the date of issuance. Calculation of premium on bonds payable: Dr Cr Date Accounts 2) Prepare the journal entry for the semi-annual bond interest payment on June 30. Calculation of Cash to be paid to bondholders: Calculation of bond amortization: Step #1: Calculate the total number of interest payments Step #2: Calculate the premium amortization Step #3: Calculate the bond interest expense Date Accounts Dr Cr Chapter 11 - Practice Problems Problem #3 - Bonds sold at Discount A company issued the below bonds on January 1, 2018. Round all answers to two decimal points ($5.95). Face Amount Contract Rate 100,000 12% Semi-annual interest payments Term of bonds 5 years Market Rate Selling Price $ 13% 96,406 1) Prepare the journal entry for the date of issuance. Calculation of discount on bonds payable: DATE ACCOUNTS DR CR