Clark Company sells 8% bonds having a maturity value of $5,000,000 for $5,421,236. The bonds are dated January 1, 2014, and mature January 1, 2019. Interest is payable annually on January 1.

Required: Set up a schedule of interest expense and premium amortization under the effective-interest method if the effective interest rate is 12%



Year


Cash Paid


Interest Expense


Premium Amortized

Carrying Amount of Bonds

Jan. 1, 2014







5421236

Dec. 31, 2014

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Dec. 31, 2015

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Dec. 31, 2016

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Dec. 31, 2017

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Dec. 31, 2018

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