Question

On January 1, 2021, a company issues $740,000 of 8% bonds, due in nine years, with interest payable semiannually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 9%, the bonds will issue at $695,008.

Required:
1. Fill in the blanks in the amortization schedule below: (Round your answers to the nearest dollar amount. Enter all amounts as positive values.)

	Date Cash Paid Interest Expense Change in Carrying Value Carrying Value 01/01/2021 06/30/2021 12/31/2021

2. Record the bond issue on January 1, 2021, and the first two semi-annual interest payments on June 30, 2021, and December 31, 2021. (If no entry is required for a particular transaction/event, select "No Journal Entry Required" in the first account field. Round your answers to the nearest dollar amount.)

Answer 1

1
Date	Cash Paid	Interest Expense	Change in Carrying Value	Carrying Value
01/01/2021				695008
06/30/2021	29600	31275	1675	696683
12/31/2021	29600	31351	1751	698434
2
		Debit	Credit
January 1, 2021	Cash	695008
	Discount on Bonds payable	44992
	Bonds payable		740000
June 30, 2021	Interest expense	31275		=695008*9%/2
	Discount on Bonds payable		1675
	Cash		29600	=740000*8%/2
December 31, 2021	Interest expense	31351		=696683*9%/2
	Discount on Bonds payable		1751
	Cash		29600