Question

Duval Co. issues four-year bonds with a $111,000 par value on January 1, 2019, at a price of $106,880. The annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. Duval Co. issues four-year bonds with a $111,000 par value on January 1, 2019, at a price of $106,880. The annual contract rate is 8%, and interest is paid semiannually on June 30 and December 31. 2. Prepare journal entries to record the first two interest payments. (Round your answers to the nearest dollar amount.) 1) Record the interest payment and discount amortization on June 30, 2019. 2) Record the interest payment and discount amortization on December 31, 2019.

Answer 1

Amortization table-Straight-Line method
Discount on Bond =$111,000 - $106,880 =$4,120
Date	Interest Payment	Interest expenses	Discount amorrtization	Bond carrying amount
01-Jan-19				1,06,880
30-Jun-19	4,440	4,955	515	1,07,395
31-Dec-19	4,440	4,955	515	1,07,910
30-Jun-19	4,440	4,955	515	1,08,425
31-Dec-19	4,440	4,955	515	1,08,940
30-Jun-20	4,440	4,955	515	1,09,455
31-Dec-20	4,440	4,955	515	1,09,970
30-Jun-21	4,440	4,955	515	1,10,485
31-Dec-21	4,440	4,955	515	1,11,000
	Date	Accounts and explanation	Debit(in $)	Credit(in $)
	30-Jun-19	Interest expenses	4,955
		Discount on Bonds payable		515
		Cash		4,440
	31-Dec-19	Interest expenses	4,955
		Discount on Bonds payable		515
		Cash		4,440