Question

On January 1, 2021, Splash City issues $330,000 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 will issue at $307,577.

Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021.

(Round your intermediate and final answers to the nearest whole dollar.)

1             January 01, 2021              Cash      307,577    (Debit)

Discount on Bonds Payable                        

Bonds Payable                 

2             June 30, 2021    

3             December 31, 2021        

Answer 1

1-Jan-21	Cash	$ 307,577.00
	Discount on Bonds Payable	$   22,423.00
	Bonds payable		$ 330,000.00
30-Jun	Interest Expenses (305,577  x 8%/2)	$   12,303
	Discount on Bonds Payable		$        753
	Cash ($330,000 x 7%/2)		$   11,550.00
31-Dec	Interest Expenses($305,577 + 753.08) x 8%/2	$   12,333
	Discount on Bonds Payable		$        783
	Cash ($330,000 x 7%/2)		$   11,550.00