Question

Required information [The following information applies to the questions displayed below.) Legacy issues $670,000 of 6.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $624,896 when the market rate is 8%.

Answer 1

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Naming convention is not available, can be slightly different: Solution: Date Credit Jan.01 Account title and explanation Cash Discount on Bonds Payable, Plug Bonds Payable (To record the issuance of bonds payable) Debit 624896 45104 670000 2) 20,100 (670000*3%) Total Bond Interest Expense over life of bonds: Amount repaid: 8 Payment of $ Par value at maturity Total Repaid Less: Amount Borrowed Total Bond Interest Expense 160800 670000 830800 -624896 205904

3) Perio Period (45104/8) = 5638 01/01/2019 06/30/2019 12/31/2019 06/30/2020 12/31/2020 Unamortized Carrying value Discount 45104 624896 39466 630534 33828 636172 28190 641810 22552 647448 Credit Date Jun.30 Debit 25,738 $ $ $ 5,638 20,100 Account title and explanation Bond Interest Expense, plug Discount on bonds payable Cash (To record the first interest payment) Bond Interest Expense, plug Discount on bonds payable Cash (To record the second interest payment) Dec.31 $ 25,738 $ $ 5,638 20,100