On January 1, 2016, Calvert Company issues 9%, $100,000 face value bonds for $103,673.08, a price...

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Accounting

On January 1, 2016, Calvert Company issues 9%, $100,000 facevalue bonds for $103,673.08, a price to yield 7%. The bonds matureon December 31, 2017. Interest is paid semiannually on June 30 andDecember 31.
Required:
1. Prepare a bond interest expense and premium amortizationschedule using the straight-line method.
2. Prepare a bond interest expense and premium amortizationschedule using the effective interest method.
3. Prepare the journal entries to record the interest payments onJune 30, 2016, and December 31, 2016, using both methods.

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Requirement 1 Amortization Schedule StraightLine Year Cash interest Interest expense Premium Amortization Carrying amount 01012016 10367380 06302016 450000 358155 91845 10275535 12312016 450000 358155 91845 10183690 06302017 450000 358155 91845 10091845 12312017 450000 358155 91845 10000000 Cash interest 1000000 x See Answer

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1.	Prepare a bond interest expense and premium amortizationschedule using the straight-line method.
2.	Prepare a bond interest expense and premium amortizationschedule using the effective interest method.
3.	Prepare the journal entries to record the interest payments onJune 30, 2016, and December 31, 2016, using both methods.