a-bond-with-a-face-value-of-100000-is-issued-at-102-and-amortized-over-8-periods

Question

A bond with a face value of $100,000 is issued at 102% and amortized over 8 periods. Calculate the premium amortization per period and provide the journal entry for the first interest payment if the cash interest paid is $4,500.

Accepted Answer

Premium amortization per period is $250; Journal Entry: Debit Interest Expense $4,250, Debit Premium on Bonds Payable $250, Credit Cash $4,500

Answer

Premium amortization per period is $500; Journal Entry: Debit Interest Expense $4,000, Debit Premium on Bonds Payable $500, Credit Cash $4,500

Answer

Premium amortization per period is $1,000; Journal Entry: Debit Interest Expense $3,500, Debit Premium on Bonds Payable $1,000, Credit Cash $4,500

Answer

Premium amortization per period is $750; Journal Entry: Debit Interest Expense $3,750, Debit Premium on Bonds Payable $750, Credit Cash $4,500

A bond with a face value of \$100,000 is issued at 102% and amortized over 8 periods. Calculate the premium amortization per period and provide the journal entry for the first interest payment if the cash interest paid is \$4,500.