Question

Required information [The following information applies to the questions displayed below.] Super Splash issues $960,000, 8% bonds on January 1, 2021, that mature in 15 years. The market interest rate for bonds of similar risk and maturity is 7%, and the bonds issue for $1,048,282. Interest is paid semiannually on June 30 and December 31. 2. & 3. Record the issuance of the bonds on January 1, the interest payments on June 30, 2021, and December 31, 2021. (If no journal entry is required for a particular transaction, select "No Journal Entry Required" in the first account field. Round your answers to the nearest dollar amount.) View transaction list Journal entry worksheet < 1 2 Record the second semiannual interest payment. Note: Enter debits before credits. General Journal Debit Credit Date December 31, 2021 Record entry Clear entry View general journal

Answer 1

Half yearly payment = $960000*8%*6/12 = $38400

June 30

Calculation of interest expense on carrying value

= $1048282*7%*6/12 = $36690

So reduction in carrying amount = $38400 - $36690 = $1710

New carrying value = $1048282 - $1710 = $1046572

December 31

Interest expense = $1046572*7%*6/12 = $36630

Reduction in carrying value = $38400 - $36630 = $1770

Entries will be as follows

Particular	debit	credit
Cash account	$1048282
Bond payable		$1048282
Interest expense	$36690
Bonds payable	$1710
Cash account		$38400
Interest expense	$36630
Bonds payable	$1770
Cash account		$38400

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