Hawkins Corporation issued $270,000 face value bonds with a 12% coupon rate that mature in 5 years. The bonds pay interest semiannually on June 30 and December 31 and were issued at a discount, with Hawkins receiving $290,844 in cash. An amortization table was prepared using the effective-interest method to show the amortization of the $20,844 discount over the first two semiannual interest periods ending June 30 and December 31.

1. On January 1, 2014 when ihe market interest rate in 10%, Hawkins Corporation issues $2/0.000
of 1?%. five year bonds payable The bonds pay interest sormannually Hawkins (Corporation
recoived $290,844 in cash at issuance Assume interest payment dates are June 30 and December
31. Prepare an effective-interest amortization method amortization table for tho first two
semiannual interest periods.
Solution
Problem
Face value of Bond 270000
Cash Received 290,844
Discount received 20,844
Annual Amortisation ((Face Value-Discount
Received)/5)
49831.2
Cash
Paid
Expenses Amortised
Carrying
Amount
01-Jan-14 270000
30-Jun-14 16200 16200 0 270000
31-Dec-14 16,200 16200 49831.2 220168.8