Question

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PQ 11 Template continued Problem Quit 11 tercise 14 on page 572 ACG2021 Financial Accounting Hint answer to b. 53,923.959 Appendix 2 Amorte discount by interest Method On the first day of the fiscal year, Ebert Company issued 550 000 000 of 10 bonds to financeits operations interest is payable semiannually. The bonds were issued at a mattetective interest rate of resulting in Ebert resulting in Ebert receiving Cash of $41.415.895. The company uses the interest method JOURNALIZE THE ENTRIES TO RECORO THE FOLLOWING: pat include Second semiannual interest payment, including Compute the amount of bond interest cense for the rest van Eine company wa s bords for only $43.495,195 ratheranosce mount of 15 Tem heese T arte COUNT THOND WAT ISTED ONCERTATE Sheet1 e Type here to search

Answer 1

Amortization table-When the Bond is issued at discount
Date	Interest Payment($50,000,000*3.5%)	Interest expenses(Bond carrying amount*4.5%)	Discount amorrtization	Bond carrying amount
Col I	Col II	Col III	Col IV(Col III - Col II)	Col V
Issue date				4,34,95,895
Year 1-Interest 1	17,50,000	19,57,315	2,07,315	4,37,03,210
Year 1-Interest 2	17,50,000	19,66,644	2,16,644	4,39,19,855
	Date	Accounts and explanation	Debit(in $)	Credit(in $)
	Issue date	Cash	$4,34,95,895
		Discount on Bonds Payable	$65,04,105
		Bonds Payable		$5,00,00,000
	30-Jun-18	Interest expenses	$19,57,315
		Cash		$17,50,000
		Discount on Bonds payable		$2,07,315
	31-Dec-18	Interest expenses	$19,66,644
		Cash		$17,50,000
		Discount on Bonds payable		$2,16,644
Part b	Total Interset expenses for Year 1 =$1,957,315 + $1,966,644 =$3,923,959
Part c	As the market interest rate(9%) is less than the stated interest rate(7%), the company has issued the Bond at discount