Question 14.6: Premium Amortization Using the bond from Example Exercise 1...

Financial Accounting

Premium Amortization

Using the bond from Example Exercise 14-5Example Exercise 14-5, journalize the first interest payment and the amortization of the related bond premium.

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Interest Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,556

Premium on Bonds Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,444

Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000

Paid interest and amortized the bond premium ($154,440 ÷ 10).

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