Bonds Payable Are Dated January 1, 2016, and Are Issued

Bonds payable are dated January 1, 2016, and are issued on that date.The face value of the bonds is $200,000, and the face rate of interest is 8%.The bonds pay interest semiannually.The bonds will mature in five years.The market rate of interest at the time of issuance was 6%.
Required:
1.What is the bond issuance price?
2.Using the effective interest amortization method, what amount should be amortized for the first six-month period? What amount of interest expense should be reported for the first six-month period?
3.Using the effective interest amortization method, what amount should be amortized for the period from July 1 to December 31, 2016? What amount of interest expense should be reported for the period from July 1 to December 31, 2016?

Correct Answer:

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