8TI
Question
On January 1, 2018, when the market interest rate is 6%, Hawkins Corporation issues \(200,000 of 8%, five-year bonds payable. The bond pay interest semianually. Hawkins Corporation recieved \)217,040 in cash at issuance. Assume interest payment dates are June 30 and December 31. Prepare an effective-intesret amortization method amortization table for the first two semiannual interest periods.
Step-by-Step Solution
Verified Answer
The carrying amount of the bonds on December 31, 2018, is $214,017.73
1Step 1: definition of carrying amount
The carrying is the amount at which the bond is purchased.
2Step 2: Bond amortization schedule
| Date | Cash Paid | Interest Expense | Premium Amortization | Carrying Amount |
| January 1,2018 | $217,040 | |||
| june 18,2018 | $8,000 | $6,511.2 | $1,488.8 | $215.551.2 |
| December 31,2018 | $8,000 | $6,466.53 | $1533.47 | $214,017.73 |
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