Smith Corp issues bonds dated January 1, 2011, that pay interest semi annually on June 30 and December 31. The bonds have a $300,000 par value and an annual contract rate of 10%. They mature in 5 years.
For each situation, complete the following:
1. Determine the cash issue price for the bonds.
2. Write the journal entry to record the issuance.
3. Calculate total bond interest expense
4. Complete the amortization table for a premium or discount using both the straight line amortization method and the effective amortization method.
5. Write the journal entry for the interest payment on June 30, 2011
6. Write the journal entry for the retirement of the bond.
1. The market rate on January 1, 2011, is 10%.
2. The market rate on January 1, 2011, is 8%.
3. The market rate on January 1, 2011, is 12%.