Accounting - Chapter 10
A. Legacy issues $630,000 of 9.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $571,310 when the market rate is 12%.
a)Prepare an effective interest amortization table for the bonds' first two years
b) Prepare the journal entries to record the first interest payments
Homework Answers
a)
Semiannual period-end | Unamortized Discount | Carrying Value |
01/01/2021 | 58690 | 571310 |
06/30/2021 | 51354 | 578646 |
12/31/2021 | 44018 | 585982 |
06/30/2022 | 36681 | 593319 |
12/31/2022 | 29345 | 600655 |
Total discount= 630000-571310= 58690
ð Per semiannual period = 58690/8= 7336.25 ( 7336)
Interest expense = (630000*9%*1/2)= 28350
Total Bond Interest expense = (630000*9%*1/2) *8 + 630000 – 571310= 285490
Bond Interest expense per semiannual period end = 285490/8= 35686.25
b)
no | Date | General journal | debit | credit |
1 | June 30 | Bond interest expense | 35686 | |
Discount on bonds payable | 7336 | |||
Cash | 28350 |
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They are issued at $507,831 when the market rate is 12%.
4. Prepare the journal entries to record the first two interest payments View transaction list Journal entry worksheet 2 Record the interest payment and amortization on June 30 Note: Enter debits before credits Date General Journal Debit Credit June 30 Record entry View general journal Clear entry 4....
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Legacy issues $560,000 of 9.0%, four-year bonds dated January 1,
2019, that pay interest semiannually on June 30 and December 31.
They are issued at $507,831 when the market rate is 12%.
4. Prepare the journal entries to record the first two interest payments View transaction list Journal entry worksheet 2 Record the interest payment and amortization on June 30 Note: Enter debits before credits Date General Journal Debit Credit June 30 Record entry View general journal Clear entry 4....
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