Question

On January​ 1, 2019, Burton Sales issued​ $23,000 in bonds for​ $35,800. These are​ eight-year bonds with a stated rate of​ 9% and pay semiannual interest. Burton Sales uses the straightminus​-line method to amortize the bond premium. Immediately after the issue of the​ bonds, the ledger balances are as​ follows: Bonds Payable ​23,000 Premium on Bonds Payable ​12,800 After the first interest payment on June​ 30, 2019, what is the balance of Premium on Bonds​ Payable? (Round your intermediate answers to the nearest​ dollar.)

Answer 1

premium on bonds payable 12,000

Step-by-step explanation:

proceeds: 35,800

face value (23,000)

premium 12,800

Amortization on premium under straight-line method:

It will be the same for each payment. It will be equally distributed among the interest payment.

premium / total payment

12,800 / 16 = 800 amortization per payment

June 30th, 2019

the premium takes an amortization for 800

so their balance is 12,800 - 800 = 12,000