Question

help me with the ones i got wrong please

Amortize Discount by interest Method On the first day of its fiscal year, Ebert Company issued $50,000,000 of 10-year, 7% bonds to finance its operations. Interest is payable semiannually. The bonds were issued at a market (effective) interest rate of 9%, resulting in Ebert receiving cash of $43,495,895. The company uses the interest method. a. Journalize the entries to record the following: 1. Sale of the bonds. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Cash 43.495,895 Discount on Bonds Payable 6,504,105 Bonds Payable 50,000,000 Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. 2. First semiannual interest payment, including amortization of discount. Round to the nearest dollar. If an amount box does not require an entry, leave it blank. Interest Expense 1.957.315 Discount on Bonds Payable 207.315 Cash 1.750 Check My Work 5 more Check My Work uses remaining. Next >

Answer 1

Solution B:
Bond interest expense for the first year = Interest paid + Discount amortized
Annual Interest Paid	$          3,500,000.00
Add: Discount Amortized	$             423,959.00	=207315+216644
Interest Expense for the year	$         3,923,959.00

There was difference in answer due to rounding off.

Working:

Year	Beginning Balance	Interest Expense	Interest Payment	Discount Amortized	Unamortized Discount	Ending Balance
1 Jan					$           (6,504,105)	$43,495,895
30 June	$         43,495,895	$     1,957,315.00	$          1,750,000	$             (207,315)	$           (6,296,790)	$43,703,210
31 Dec	$         43,703,210	$     1,966,644.00	$          1,750,000	$             (216,644)	$           (6,080,146)	$43,919,854
Total		$          3,923,959	$          3,500,000	$             (423,959)

Since only (b) part of the question is asked to be answered , the same have been done.

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