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?

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