Answer:
Dr. Bond Receivable $30,761
Cr. Gain on Revaluation $30,761
Explanation:
A bond is issued on the premium if it is issued at a value over its face value,
Bond Premium = Issuance value - Face Value = $1,249,896 - $1,200,000 = $49,896
July 1,2021
Amortization = ($1,200,000 x 8% ) - ( $1,249,896 x 7% ) = $8,507 x 6/12 = $4,254
Un-amortised Premium = $49,896 - $4,254 = $45,642
Carrying Value = $1,200,000 - $45,642 = $1154,358
Dec 31 , 2021
Amortization = ($1,200,000 x 8% ) - ( $1,245,642 x 7% ) = $8,507 x 6/12 = $4,403
Un-amortised Premium = $45,642 - $4,403 = $41,239
Carrying value = $1,200,000 + $41,239 = $1,241,239
Revaluation Gain = 1,272,000 - $1,241,239 = $30,761
