Question

Required information Exercise 14-7 Straight-Line: Amortization table and bond interest expense LO P2 The following information applies to the questions displayed below) Duval Co. issues four-year bonds with a $100.000 par value on January 1, 2019, at a price of $95.952. The annual contract rate is 7%, and interest is paid semiannually on June 30 and December 31 Exercise 14-7 Part 2 2. Prepare journal entries to record the first two interest payments Answer is not complete. June 30, 2019 Credle General Journal Bonds payable Discount on bonds payable Cash Doble 100 000 4048 95 952 December 31, 201 Bond interest expense 100 000 100,000 $

Answer 1

7% 1,00,000 3,500 Coupon rate Bond maturity value (mv) Interest amount per semi annual (100000*7%/2) Bond Purchase price (cost) Term (n) 95,952 8 periods Market rate Interest amount + (mv-cost)/n (mv+cost)/2 3500+(100000-95952)/8 (100000+95952)/2 4.104% Ammortization Schedule Bond Interest Discount Carrying Semi-Annual Interest Period-end Cash Interest expense Amortization Value 01-01-2019 $ 95,952 30-06-2019 3,938 $ 3,500 $ 438 $ 96,390 31-12-2019 3,956 $ 3,500 $ 456 $ 96,846 30-06-2020 $ 3,975 $ 3,500 $ 475 $ 97,321 31-12-2020 $ 3,994 $ 3,500 $ 494 $ 97,815 30-06-2021 4,014 $ 3,500 $ 514$ 98,329 31-12-2021 $ 4,035 $ 3,500 $ 535 $ 98,864 30-06-2022 4,057 $ 3,500 $ 557 $ 99,421 31-12-2022 4,080$ 3,500 $ 579 $ 1,00,001

Requirement 2 30-Jun-19 $ 3,938 Interest expense Dr To Cash To Discount of Bonds (To record the payment of interest) 3,500 438 $ 31-Dec-19 $ 3,956 Interest expense Dr To Cash To Discount of Bonds (To record the payment of interest) $ 3,500 456 Requirement 3 31-Dec-22 Dr $ 1,00,000 Bond Payable To Cash (To record payment of bond face value) $ 1,00,000