On March 1, 2017, Taft Corporation issues 10-year bonds, dated January 1, 2017, at 102% of a par value of $800,000 (premium). These bonds have an annual interest rate of 6 percent, payable semiannually on January 1 and July 1.

its March 1 entry would be:

Cash [($800,000 1.02) + ($800,000 .06 2/12)]	824,000
Bonds Payable		800,000
Premium on Bonds Payable ($800,000 .02)		16,000
Interest Expense		8,000

Taft would amortize the premiumfrom the date of sale(March 1, 2017), not from the date of the bonds (January 1, 2017). As a result, the premium amortization at July 1, 2017, is$542.37[($16,000$118)4].

My question is regarding the final sentence which discusses the premium amortization at july 1. Im not sure how the formula was created to find the amount at 543.37.... More specifically, I dont know how the book came up with the number $118 in the formula..... Some clarification would be nice. Thanks

800,000

Interest Expense ($800,000 .06 2/12)

8,000

(Interest Payable might be credited instead)