Otter Products Inc. issued bonds on January 1, 2019. Interest is to be paid semi-annually. Other information is as follows: Term in years: 2 Face value of bonds issued: $200,000 Issue price: $206,000 Specified interest rate each payment period: 6% Required: Calculate: a. The amount of interest paid in cash every payment period. b. The amount of amortization to be recorded at each interest payment date (use the straight-line method). Complete this amortization table by calculating interest expense, and beginning and ending bond carrying amounts at the end of each period over three years. Amortization Table A B C D E (A + D) Year Period ending Beg. bond carrying amount Periodic interest expense Actual cash interest paid Periodic discount (prem.) amort. Ending bond carrying amount 2019 Jun. 30 Dec. 31 2020 Jun. 30 Dec. 31 2021 Jun. 30 Dec. 31 Calculate the actual interest rate under the straight-line method of amortization for each six-month period. Round all percentage calculations to two decimal placed. Use the following format: A B Six month period ending Bond carrying amount Six-month interest expense % Year (B/A) 2019 Jun. 30 Dec. 31 2020 Jun. 30 Dec. 31 2021 Jun. 30 Dec. 31 Prepare the journal entry for December 31, 2019.
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Otter Products Inc. issued bonds on January 1, 2019. Interest is to be paid semi-annually. Other information is as follows:
Term in years: 2
Face
Issue price: $206,000
Specified interest rate each payment period: 6%
Required:
Calculate:
a. The amount of interest paid in cash every payment period.
b. The amount of amortization to be recorded at each interest payment date (use the straight-line method).
Complete this amortization table by calculating interest expense, and beginning and ending bond carrying amounts at the end of each period over three years.
Amortization Table
A B C D E
(A + D)
Year Period ending Beg. bond carrying amount Periodic interest expense Actual cash interest paid Periodic discount (prem.) amort. Ending bond carrying amount
2019 Jun. 30
Dec. 31
2020 Jun. 30
Dec. 31
2021 Jun. 30
Dec. 31
Calculate the actual interest rate under the straight-line method of amortization for each six-month period. Round all percentage calculations to two decimal placed. Use the following format:
A B
Six month period ending Bond carrying amount Six-month interest expense
%
Year (B/A)
2019 Jun. 30
Dec. 31
2020 Jun. 30
Dec. 31
2021 Jun. 30
Dec. 31
Prepare the
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