Discuss the below problem:
Q: Straight-line amortization of bond premium L.O. P3 Prairie Dunes Co. issues bonds dated January 1, 2011, with a par value of $800,000. The bonds annual contract rate is 13%, and interest is paid semiannually on June 30 and December 31. The bonds mature in three years. The annual market rate at the date of issuance is 12%, and the bonds are sold for $819,700.
1. What is the amount of the premium on these bonds at issuance? (Omit the "tiny_mce_markerquot; sign in your response.) Premium $
2. How much total bond interest expense will be recognized over the life of these bonds? (Round your answer to the nearest dollar amount. Omit the "tiny_mce_markerquot; sign in your response.) Total bond interest expense $
3. Prepare an amortization table for these bonds; use the straight-line method to amortize the premium. (Make sure that the unamortized premium equals "0" and the Carrying value equals the face value of the bonds in the last period.