Response to the following :
Effective-Interest Amortization of Premium
Assume the same facts as in problem. Prepare a schedule showing the amortization of the bond premium over the six-year life of the bonds. Use the effective-interest method of amortization.
Problem:
Straight-Line Amortization of Premium
On their issuance date, Salina Company purchased thirty-five $1,000, 10%, six-year bonds of AF Corporation as a long-term investment for $38,285. Interest payments are made semiannually. Prepare a schedule showing the amortization of the bond premium over the six-year life of the bonds. Use the straight-line method of amortization.