Question

Problem 10-1A Straight-Line: Amortization of bond discount LO P2

Topic: Click here to ask chapturstplated queste Ch 10: Homework Ch 10: Homework Saved Help Save & Exit Submit Check my work mode: This shows what is correct or incorrect for the work you have completed so far. It does not indicate completion Return to question Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2(a) For each semiannual period, complete the table below to calculate the cash payment. 2(b) For each semiannual period, complete the table below to calculate the straight-line discount amortization. 2(c) For each semiannual period, complete the table below to calculate the bond interest expense. 3. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 4. Prepare the first two years of a straight-line amortization table. 5. Prepare the journal entries to record the first two interest payments. points & Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Req 1 Req 2A to 2C Reg 3 Reg 4 Reg 5 Prepare the first two years of a straight-line amortization table. Semiannual Period-End 01/01/2019 06/30/2019 12/31/2019 06/30/2020 12/31/2020 Unamortized Discount $ 163,065 157,630 152,195 146,730 / 141,295 $ Carrying Value $ 1,036,935 1,042,370 1,047,805 1,053,240 1,058,675 ® < Req3 Reg 5 >

Answer 1

1
Date	General Journal	Debit	Credit
1-Jan-19	Cash	1,036,935
	Discount on bonds payable	163,065
	Bonds payable		1,200,000
2a
Par (maturity) value		Annual Rate		Year		Semiannual cash interest payment
$1,200,000	x	8%	x	6/12	=	$48,000
b
Par (maturity) value		Bonds price		Discount on Bonds Payable		Semiannual periods		Straight-line discount amortization
$1,200,000	-	$1,036,935	=	$163,065	÷	30	=	$5,435
c
Semiannual cash payment		Discount amortization		Bond interest expense
$48,000	+	$5,435	=	$53,435
3
Total bond interest expense over life of bonds:
Amount repaid:
30	payments of	$48,000	1440000
Par value at maturity			1,200,000
Total repaid			2,640,000
Less amount borrowed			1,036,935
Total bond interest expense			1,603,065
4
Semiannual Period-End	Unamortized Discount	Carrying Value
1/1/2019	$163,065	$1,036,935
6/30/2019	157,630	$1,042,370
12/31/2019	152,195	$1,047,805
6/30/2020	146,760	$1,053,240
12/31/2020	141,325	$1,058,675
Date	General Journal	Debit	Credit
30-Jun-19	Bond interest expense	53,435
	Discount on bonds payable		5,435
	Cash		48,000
31-Dec-19	Bond interest expense	53,435
	Discount on bonds payable		5,435
	Cash		48,000