Chapter 14, Problem S14A.15SE

Using the effective-interest amortization method

On December 31, 2016, when the market interest rate is 10%, Timmony Realty issues $450,000 of 7.25%, 10-year bonds payable. The bonds pay interest semiannually. The present value of the bonds at issuance is $372,936.

Requirements

1. Prepare an amortization table using the effective interest amortization method tor the first two semiannual interest periods. (Round all numbers to the nearest whole dollar.)
2. Using the amortization table prepared in Requirement 1, journalize issuance of the bonds and the first two interest payments.