Question

Required information Exercise 10.7 Straight-Line: Amortization table and bond interest expense LO P2 The following information applies to the questions displayed below) Duval Co. Issues four-year bonds with a $102,000 par value on January 1, 2019, at a price of $97.990. The annual contract rate is 9% and interest is paid semiannually on June 30 and December 31 Exercise 10-7 Part 1 1. Prepare a straight line amortization table for these bonds (Round your answers to the nearest dollar amount.) Unamortized D iscount Semiannual Period End 1/01/2019 6/30/2019 Carrying Value 12/31/2019 6/30/2020 12/31/2020 6/30/2021 12/31/2021 6/30/2022 12/31/2022

Answer 1

Discount on issue of Bond = Par value - issue price

102000- 97990 = 4010

Semi annual Discount amortization = 4010/(4*2) = 501

Semi annual period end	Un amortized Discount	Carrying Value (Last semi annual carrying value+ 501)
01-01-19	4010	97990
6/30/2019	3509 (4010-501)	98491
12/31/2019	3008 (3509-501)	98992
6/30/2020	2507 (3008-501)	99493
12/31/2020	2006 (2507-501)	99994
6/30/2021	1505 (2006-501)	100495
12/31/2021	1004 (1505-501)	100996
6/30/2022	503 (1004-501)	101497
12/31/2022	0 (503-503) Balancing fig	102000 (101497+503)

Interest on bond = 102000*9 % = 9180

Semi annual interest = 9180/2 = 4590

Interest Entry

Date	General Journal	Debit	Credit
June 30,2019	Interest Expense	4590
	Cash		4089
	Discount on Bond payable		501

Maturity Entry

Date	General Journal	Debit	Credit
31-Dec-22	Bond Payable	102000
	Cash		102000