Question

Required information Problem 10-4A Straight-Line: Amortization of bond discount LO P2 The following information applies to the questions displayed below.) Legacy issues $560,000 of 9.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $507,831 when the market rate is 12% Problem 10-4A Part 2 2. Determine the total bond interest expense to be recognized over the bonds' life Total bond interest expense over life of bonds: Amount repaid payments of $ 19,380,000 Par value at maturity Total repaid Less amount borrowed Total bond interest expense 57.000.000 57,000,000 50.805.000 6.195.000 $

Answer 1

Requirement 1 1-Jan Cash Discount on Bond Payable Bond Payable 507831 25200 533031

Requirement 2 560000 x 9.00%x6/12 25200 2a 2b 560000- 50783152169/ 86521 2c 25200 652131721

Requirement 3 8 Payment of Par value Total Repaid Less: Amount borrowed Total bond int expense 25200 201600 560000 761600 -507831 253769 Requirement 4 52169 507831 45648 514352 39127 520873 32606 527394 26085 533915 1/1/2019 6/30/2019 12/31/2019 6/30/2019 12/31/2019 Requirement 5 30-Jun Interest Expense 31721 Discount on Bond Payable 6521 25200 Cash 31-Dec Interest Expense 31721 Discount on Bond Payable 6521 Cash 25200