Question

payable Dec. 31. Paid the semiannual interest on the bonds. The bond discount amortization of $12,265 is combined with the semiannual interest payment amortization of discount have been recorded. (Record the redemption only.) Required: to the MacBook Pro

Answer 1

1.

Date	Account	Debit	Credit
Year 1
July 1	Cash	1427352
	Discount on bonds payable	122648
	Bonds payable		1550000
	(To record issuance of bonds)
Dec. 31-Bond	Interest expense	66515
	Discount on bonds payable		12265
	Cash (7% x $1550000 x 1/2)		54250
	(To record semiannual interest payment)
Dec. 31-Closing	Income summary	66515
	Interest expense		66515
	(To close interest expense account)
Year 2
June 30	Interest expense	66515
	Discount on bonds payable		12265
	Cash (7% x $1550000 x 1/2)		54250
	(To record semiannual interest payment)
Dec. 31-Bond	Interest expense	66515
	Discount on bonds payable		12265
	Cash (7% x $1550000 x 1/2)		54250
	(To record semiannual interest payment)
Dec. 31-Closing	Income summary	133030
	Interest expense		133030
	(To close interest expense account)
Year 3
June 30	Bonds payable	1550000
	Loss on redemption of bonds	42588
	Discount on bonds payable		73588
	Cash ($1550000 x 98/100)		1519000
	(To record redemption of bonds payable)

2(a) Interest expense in Year 1: $66515

2(b) Interest expense in Year 2: $133030

3. Carrying amount of the bonds as of December 31, Year 2 = $1550000 - [$122648 - (3 x $12265)] = $1550000 - $85853 = $1464147