Question

cullumber Corporation issued $3.06 million of 7-year, 1% bonds dated January 1, 2017, for $2,676,173. The market interest rate when the bonds were issued was 3%. Interest is payable semi-annually on January 1 and July 1. Cullumber has a December 31 year end.

Prepare an amortization schedule for the first three interest payments. (Round answers to 0 decimal places, e.g. 5,276.) CULLUMBER CORPORATION Bond Amortization Table Effective Interest Method—Semi-annual Interest Payments 1% Bonds Issued at market rate of 3% Date Interest Payment Interest Expense Discount Amortization Bond Amortized Cost Jan. 1, 2017 $ $ $ $ July 1, 2017 Jan. 1, 2018 July 1, 2018 LINK TO TEXT

Prepare the journal entry to record the first interest payment on July 1, 2017. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit July 1, 2017 LINK TO TEXT

Prepare the adjusting journal entry on December 31, 2017, to accrue the interest expense. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2017 LINK TO TEXT

Prepare the journal entry for the payment of interest on January 1, 2018. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Date Account Titles and Explanation Debit Credit Jan. 1, 2018

Answer 1

Amortization Table-As per Effective Interest method
Date	Interest Payment($3,060,000*1%*6/12)	Interest expenses(Bond carrying amount*1.5%)	Discount amortization	Bond amortized cost
Col I	Col II	Col III	Col IV(Col III - Col II)	Col V
01-Jan-17				$                           26,76,173
01-Jul-17	$                                                  15,300	$                                                              40,143	$                                                 24,843	$                           27,01,016
01-Jan-18	$                                                  15,300	$                                                              40,515	$                                                 25,215	$                           27,26,231
01-Jul-18	$                                                  15,300	$                                                              40,893	$                                                 25,593	$                           27,51,824
Date	Accounts and explanation	Debit(in $)	Credit(in $)
01-Jul-17	Interest expenses	$                                                              40,143
	Cash		$                                                 15,300
	Discount on Bond Payable		$                                                 24,843
	(to interest paid for 1st semiannual period)
31-Dec-17	Interest expenses	$                                                              40,515
	Interest Payable		$                                                 15,300
	Discount on Bond Payable		$                                                 25,215
	(to interest accrued for 2nd semiannual period)
01-Jan-18	Interest Payable	$                                                              15,300
	Cash		$                                                 15,300
	(to interest paid for 2nd semiannual period)