Homework Answers
| 01-Jan-21 | Cash | 76,33,757 | ||
| Discount on bonds payable | 1,21,66,243 | |||
| Bonds payable | 1,98,00,000 | |||
| Effective rate of interest | 10% | (76,33,757/1,98,00,000= 0.39 Check this value in PV table at 10 years) | ||
| Recording interest expense | ||||
| 31-12-2021 | Interest Expense | 763375.7 | (76,33,757*10%) | |
| Discount on bonds payable | 763375.7 | |||
| 31-12-2022 | Interest Expense | 8,39,713 | (76,33,757+763375)*10% | |
| Discount on bonds payable | 8,39,713 | |||
| 31-12-2030 | Bonds payable | 1,98,00,000 | ||
| To cash | 1,98,00,000 | |||
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