Question

Required information [The following information applies to the questions displayed below] On January 1, 2021, Splash City issues $390,000 of 7 % bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year Assuming the market interest rate on the issue date is 8 %, the bonds wil issue at $363,500. Required: 1. Complete the first three rows of an amortization table. (Round your intermediate and final answers to the nearest whole dollar.) Change in Carrying Value Interest Carrying Value Date Cash Paid Expense 1/1/21 6/30/21 12/31/21

Answer 1

Cash interest = 390000*7%*6/12 13650.0 Interest Expenses = 363500*8%*6/12 14540 364390*8%*6/12 14576 Amortization Sechedule Interest Change in the Date Cash Paid Expense | Carrying value Carrying Value Jan-21 Jun-30 Dec-31 13650 13650 14540 14576 890 926 363500 364390 365316

Issue Entry 1. Record the Bond Issue Date General Journal Debit Credit Jan 1,2021 Cash 363500 Discount on Bonds Payable 26500 Bonds Payable 3900001 Record the issue of the Bond with Discount Journal entris for interest Payment Record the interest payment and amotization on June 30 1st First Year Date General Journal Debit Credit July 30,2021 Interest Expenses 14540 Discount on Bonds Payable 890 Cash 13650 Record the interest Expense and amortization of Discount 3. Record theinterest and amotization on Dec 31, First Year Date General Journal Debit Credit Dec 31,2021 Interest Expenses 14576 Discount on Bonds Payable 926 Cash 13650 Record the interest Expense and amortization of Discount Interest