Question

Required information Problem 10-4A Straight-Line: Amortization of bond discount LO P2 The following information applies to the questions displayed below] Legacy issues $590,000 of 7.5%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $542,310 when the market rate is 10% Problem 10-4A Part 1 Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. View transaction list Journal entry worksheet < 1 Record the issue of bonds with a par value of $590,000 on January 1, 2019 at an issue price of $542,310. Note: Enter debits before credits Date General Journal Debit Credit January 01 Record entry Clear entry View general journal

Answer 1

Answer Page No ① © Tournd entry to record the bonds isuren - Particular Debit Cash $549310 Discount on bond payable $ 47690 Date Gedit Jan! Bond payable $ 590,000 Discount on bond payable a 590000 - 542310 = $47690 bond 01 bond olen Cupene WA WA . 590,000 X 84.57X = $20125 (** June 30 tockc3i 6 months A 590000 – 542310 = $44690 (4x2) years igers = $5961.25 à $5961 (4x2) years 20125 + 5961.25 = $28086.25 $ 28086

- Page, wo w Tartal bond interest expense over life of bonds Amount Amount repaid 8 payments of $ 2325 C2212588) 144000 Par value at maturity $ 590,000 Total repaid $ 767000 Amount borrowed 1$ 542310) Total bond interest expense $ 224690 3 Straight line amortization table Period end enamortized discount - Previous unamostiged discount – $596) Carrying value = Previous carrying value + $55961 semi annual unamortiged discount Carrying value 111119 $ 47690 $542 310 6130119 $ 47929 $548271 12/31119 $35768 $ 554232 6130120 $39807 $ 560193 10/31/20 $ 23846 $566154

Page No ③ * Tacunal scobices to second ficut Pinterest pay unto Date - Particular Debit Credit Interest expense $28086 Discount on bond payable $5961 .. Cash $22125 | dec 31 1 Interest expense $28086 Discount on bond payable $5961 $ 22125 June 30 cash