Saturn issues 6.5%, five-year bonds dated January 1, 2011, with a $500,000 par value. The bonds pay interest on June 30 and December 31 and are issued at a price of $510,666. The annual market rate is 6% on the issue date.
1.) Compute the toal bond interest expense over the bonds life
2.)Prepare an effective interest amortization table for the bonds' life.
(a) Cash interest paid (b) Bond interest expense (c) Premium Amortization (d) Un amortized Premium (e) Carrying value
3. Prepare journal entries to record the first two interest payments
4. Use the market rate at issuance to compute the present value of the remaining cash flows for these bonds as of December 31, 2013