Question

Yok C p ration issued 4 10-year bonds Read the rcquirements Requireinent 1. Revard ปาษ tsuance u B tace value ot $1.300 00 ล1a price o 90 on July 1 2018 he bonds pay interest eech January 1 and Juey 1 Yokuses estraig t ine an o zation method to all bond pre un e and discount The company has ล t cal yaa endot Uecember 31 of U1 bunds un July 1, 2013 Record debite firsL then credis. Exclude explareloris hum anyjournal enties) Joumal Entry Date Accounts Debit Credit 2018 11/0,000 130,000 Jul 1 Cash Discount un Bonds Payable Bonds Payable 1.300,000 RAN Iramant 2 Raro tha a nual or a cash inte est payable on tha ho ds and tha amntization n any p n um or d secu t n tha bon s nn Daca her 20 18 ano d d h s trst man na t ser da op nations n m any srnal ล es Journal Entry Date Accounts Dahir Credit Dac 31

Answer 1

Answer 1:

Journal Entry Date Debit Credit 2018 Jul. 1 Cash Discount on Bonds Payable $1,170,000 $130,000 Bonds Payable $1,300,000

Answer 2:

Bond maturity = 10 years

Interest is paid semiannually

Number of semiannual periods = 20

Semiannual amortization of bond discount on straight line basis = $130,000 / 20 = $6,500

Semiannual interest payment = $1,300,000 * 4%/2 = $26,000