Question

Advise your instructor when done. Late submissions will be penalized 15%. on: On January 31, 2016 Company M Issued 10-year, 4% bonds with a face value of $100,000. The bonds were issued at 94 and pay interest on January 31 and July 31. Company M amortizes their bonds by the straight-line method. Record (a) issuance of the bonds on January 31, (b) the semi-annual interest payment and discount amortization on July 31, and (c) the interest accrual and discount amortization on December 31. at's Response Below (note: only answers in box below will be graded): W 10

Answer 1

Solution:

No.	Date	Account Name	Debit	Credit
A	31/1/2016	Cash	$        94,000
		Discount on Bands Payable	$          6,000
		Bonds Payable		$         100,000
		( To record bonds issue)
B	31/7/2016	Interest Expense [2000+300]	$          2,300
		Discount on Bonds Payable [6000/20]		$                  300
		Cash [100000*4%*6/12]		$              2,000
		( To record interest expense paid)
C	31/12/2016	Interest Expense [2300*5/6]	$          1,917
		Discount on Bonds Payable [300*5/6]		$                  250
		Interest Payable [2000*5/6]		$              1,667
		( To record interest expense paid)

Explanation:

Straight Line Method
Date	Cash Paid	Interest Expense	Discount Amortized	Unamortized Discount	Carrying Amount of Bonds
31/1/2016				$                 6,000	$                                            94,000
31/7/2016	$          2,000	$                     2,300	$                         300	$                 5,700	$                                            94,300
31/1/2017	$          2,000	$                     2,300	$                         300	$                 5,400	$                                            94,600
31/7/2017	$          2,000	$                     2,300	$                         300	$                 5,100	$                                            94,900
31/1/2018	$          2,000	$                     2,300	$                         300	$                 4,800	$                                            95,200
31/7/2018	$          2,000	$                     2,300	$                         300	$                 4,500	$                                            95,500
31/1/2019	$          2,000	$                     2,300	$                         300	$                 4,200	$                                            95,800
31/7/2019	$          2,000	$                     2,300	$                         300	$                 3,900	$                                            96,100
31/1/2020	$          2,000	$                     2,300	$                         300	$                 3,600	$                                            96,400
31/7/2020	$          2,000	$                     2,300	$                         300	$                 3,300	$                                            96,700
31/1/2021	$          2,000	$                     2,300	$                         300	$                 3,000	$                                            97,000
31/7/2021	$          2,000	$                     2,300	$                         300	$                 2,700	$                                            97,300
31/1/2022	$          2,000	$                     2,300	$                         300	$                 2,400	$                                            97,600
31/7/2022	$          2,000	$                     2,300	$                         300	$                 2,100	$                                            97,900
31/1/2023	$          2,000	$                     2,300	$                         300	$                 1,800	$                                            98,200
31/7/2023	$          2,000	$                     2,300	$                         300	$                 1,500	$                                            98,500
31/1/2024	$          2,000	$                     2,300	$                         300	$                 1,200	$                                            98,800
31/7/2024	$          2,000	$                     2,300	$                         300	$                    900	$                                            99,100
31/1/2025	$          2,000	$                     2,300	$                         300	$                    600	$                                            99,400
31/7/2025	$          2,000	$                     2,300	$                         300	$                    300	$                                            99,700
31/1/2026	$          2,000	$                     2,300	$                         300	$                        -	$                                          100,000