On January 1, 20X1, Bottle Rocket Company issued $600,000 in long-term bonds. The bonds will mature...

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On January 1, 20X1, Bottle Rocket Company issued $600,000 in long-term bonds. The bonds will mature in five years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest semiannually on June 30 and Dec. 31 of each year. The bonds are to be accounted for under the effective-interest method. Instructions (a) Calculate the issue price of the bond. YOU MUST SHOW YOUR WORK TO RECEIVE FULL CREDIT. (b) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each interest payment date. Include only the first two years. In columns D and E, circle the correct term, Premium or Discount. Round to the nearest dollar. A Beginning Carrying Value B C Date 1/1/X1 N/A Interest Expense N/A Cash Interest Payment D Discount or Premium Amortization E Discount or Premium on Bonds F Ending Carrying Value N/A N/A 6/30/X1 12/31/X1 6/30/X2 12/31/X2 (c) Prepare the journal entries that will be made on January 1, 20X1, December 31, 20X1 and on June 30, 20X2. DATE ACCOUNT TITLE DEBIT CREDIT On January 1, 20X1, Bottle Rocket Company issued $600,000 in long-term bonds. The bonds will mature in five years and have a stated interest rate of 8% and a yield rate of 10%. The bonds pay interest semiannually on June 30 and Dec. 31 of each year. The bonds are to be accounted for under the effective-interest method. Instructions (a) Calculate the issue price of the bond. YOU MUST SHOW YOUR WORK TO RECEIVE FULL CREDIT. (b) Construct a bond amortization table for this problem to indicate the amount of interest expense and discount amortization at each interest payment date. Include only the first two years. In columns D and E, circle the correct term, Premium or Discount. Round to the nearest dollar. A Beginning Carrying Value B C Date 1/1/X1 N/A Interest Expense N/A Cash Interest Payment D Discount or Premium Amortization E Discount or Premium on Bonds F Ending Carrying Value N/A N/A 6/30/X1 12/31/X1 6/30/X2 12/31/X2 (c) Prepare the journal entries that will be made on January 1, 20X1, December 31, 20X1 and on June 30, 20X2. DATE ACCOUNT TITLE DEBIT CREDIT