Homework Answers
Solution assuming straight line method for amortization is used.
If effective interest is used please leave a comment so that i can change the solution
| Date | General Journal | Debit | Credit |
| Jan-01 | Cash | $ 469,544.00 | |
| Premium on bonds payable | $ 39,544.00 | ||
| Bonds payable | $ 430,000.00 | ||
| Jun-30 | Bond interest expense | $ 15,881.87 | |
| Premium on bonds payable | $ 1,318.13 | ||
| Cash | $ 17,200.00 | ||
| (To record bond interest) | |||
| Dec-31 | Bond interest expense | $ 15,881.87 | |
| Premium on bonds payable | $ 1,318.13 | ||
| Cash | $ 17,200.00 | ||
| (To record bond interest) |
Working
| Bond issue price | $ 469,544 |
| Face value | $ 430,000 |
| Premium on bonds payable | $ 39,544 |
| Number of Interest payments (15 years x 2) | 30 |
| Discount/ premium to be amortized per Half year | $ 1,318 |
| Cash Interest on bond (430000 x 4%) | $ 17,200 |
| Interest expense to be recorded (17200-1318) | $ 15,882 |
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variety of transportable spin rides, issues $500,000 of 7% bonds,
due in 20 years, with interest payable semiannually on June 30 and
December 31 each year.
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