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Required information Problem 10-5A Straight-Line: Amortization of bond premium and discount LO P1, P2, P3 The following infor


Required information Problem 10-5A Straight-Line: Amortization of bond premium and discount LO P1, P2, P3 (The following info
Required information Problem 10-5A Straight-Line: Amortization of bond premium and discount LO P1, P2, P3 [The following info
Required information Problem 10-5A Straight-Line: Amortization of bond premium and discount LO P1, P2, P3 [The following info
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Answer #1

Face Value = $700,000
Proceed from Issuance = $643,419

Discount on Bonds Payable = Face Value - Proceed from Issuance
Discount on Bonds Payable = $700,000 - $643,419
Discount on Bonds Payable = $56,581

Annual Coupon Rate = 7.50%
Semiannual Coupon Rate = 3.75%
Semiannual Coupon = $700,000 * 3.75%
Semiannual Coupon = $26,250

Semiannual Periods = 8 (4 years)

Semiannual Amortization of Discount = Discount on Bonds Payable / Semiannual Periods
Semiannual Amortization of Discount = $56,581 / 8
Semiannual Amortization of Discount = $7,073

Semiannual Interest Expense = Semiannual Coupon + Semiannual Amortization of Discount
Semiannual Interest Expense = $26,250 + $7,073
Semiannual Interest Expense = $33,323

Answer 1.

Credit Date Jan. 01, 2017 General Journal Cash Discount on Bonds Payable Bonds Payable Debit 643,419 56,581 700,000

Answer 2.

Total bond interest expense over life of bonds: Amount repaid: 8 payments of 26250 Par value at maturity Total repaid Less: a

Answer 3.

Carrying Value Semiannual Period End 01/01/2017 06/30/2017 12/31/2017 06/30/2018 12/31/2018 Unamortized Discount 56581 49508

Answer 4.

Credit Date June 30, 2017 Debit 33,323 General Journal Interest Expense Discount on Bonds Payable Cash Interest Expense Disco

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