Question

Required information (The following information applies to the questions displayed below. On January 1, 2019, Drennen Inc. issued $2.6 million face amount of 7-year, 10% stated rate bonds when market interest rates were 8%. The bonds pay semiannual interest each June 30 and December 31 and mature on December 31, 2025. Table 6-4, Table 6-5 (Use appropriate factor from the table provided.) b-2. Assume instead that the proceeds were $2,534,000. Record the journal entry to show the payment of semiannual interest and the related discount amortization on June 30, 2019, assuming that the discount of $66,000 is amortized on a straight-line basis. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Answer is complete but not entirely correct. No Event Debit Credit 1 1 General Journal Interest expense Discount on bonds payable Cash 133,667 X ✓ 66,000 X 3,667 X

Answer 1

Credit Req b-2. Journal Entry as follows No Event General Journal 1 1 Interest Expense Discount on Bonds Payable Cash Debit $ 1,34,714 $ $ 4,714 1,30,000 WN: Discount on Bond Payables: =($ 2,600,000 - $ 2,534,000)/14 Periods $ 4,714 Interest Payable: =$ 2,600,000*10%*6/12 $ 1,30,000 Let me know, if you have any questions over comments section, rate positive if you are satisfied with the solution