Problem - On June 1, 2014, Fowler Corp. issued five-year, $60,000, 10% bonds dated February 1, 2014. The bonds were sold to yield 8% interest. Interest is payable semi-annually on February 1 and August 1.
Bond issue costs incurred and deducted by the broker were $1,500. Fowler uses the effective interest method of amortizing any bond discount or premium.
Instructions -
1. Prepare the journal entry for the bond issuance on June 1, 2014.
2. How much amortization expense will Fowler recognize for the bond issue costs on June 30, 2014? (You must explain your answer, as you can still get this correct, even if your end figures are wrong).
3. Prepare a bond interest amortization table for years 2014 -2018.