Question

Connect Homework - Chapter 10 Saved Help Save & Exit Submit Exercise 10-3 Recording bond issuance and interest LO P1 On January 1, Boston Enterprises issues bonds that have a $2,100,000 par value, mature in 20 years, and pay 7% interest semiannually on June 30 and December 31. The bonds are sold at par. points 1. How much interest will Boston pay (in cash) to the bondholders every six months? 2. Prepare journal entries to record (a) the issuance of bonds on January 1. (b) the first interest payment on June 30. and (c) the second interest payment on December 31. 3. Prepare the journal entry for issuance assuming the bonds are issued at (a) 98 and (b) 102. Skipped eBook Complete this question by entering your answers in the tabs below. Print Required 1 Required 2 Required 3 How much interest will Boston pay (in cash) to the bondholders every six months? Par (maturity) Value Semiannual Rate Semiannual Cash Interest Payment Requires Required 2 >
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Answer 1

1
	Par (maturity) Value		Semiannual Rate		Semiannual cash Interest Payment
	2100000	X	3.50%	=	73500
2
		Debit	Credit
Jan 01	Cash	2100000
	Bonds payable		2100000
June 30	Bond interest expense	73500
	Cash		73500
Dec 31	Bond interest expense	73500
	Cash		73500
3
Jan 01	Cash	2058000		=2100000*0.98
	Discount on bonds payable	42000
	Bonds payable		2100000
Jan 01	Cash	2142000		=2100000*1.02
	Bonds payable		2100000
	Premium on bonds payable		42000