Scenario 3: Issuing Bond @ Premium using Effective Interest Rate Method

NLC Corp issues 10 $1,000 bonds with a coupon rate of 5% on Jan 1, 2014. These bonds mature in 5 years and interest is paid semi annually. The market rate at the time of issuance is 4%.

1-Calculate the price of this bond (show ALL calculations)

2- Complete the effective interest amortization table for this bond below:

Date	Cash interest payment	Bond interest expense	Premium amortization	Unamortized premium	Carrying value
6/30/2014
12/31/2014
6/30/2015
12/31/2015
6/30/2016
12/31/2016
6/31/2017
12/31/2017
6/30/2018
12/31/2018
Total					10,000

3- Record all the journal entries using the journal below

Date	Accounts	Debit	Credit
1/1/2014 (Issuance date)
6/30/2014
12/31/2014
6/30/2015
12/31/2015
6/30/2016
12/31/2016
6/30/2017
12/31/2017
6/30/2018
12/31/2018 (Maturity date)