Question

On January 1, Renewable Energy issues bonds that have a $40,000 par value, mature in eight years, and pay 16% interest semiannually on June 30 and December 31. 1. Prepare the journal entry for issuance assuming the bonds are issued at (a) 99 and (b) 10372. 2. How much interest does the company pay (in cash) to its bondholders every six months if the bonds are sold at par? points Complete this question by entering your answers in the tabs below. 8 02:20:22 Required 1 Required 2 Prepare the journal entry for issuance assuming the bonds are issued at (a) 99 and (b) 103V2. View transaction list Journal entry worksheet Record the issuance for bond at 99. Note: Enter debits before credits. Date General Journal Debit Credit Jan 01 Record entry Clear entry View general journal

Answer 1

1
		Debit	Credit
Jan 01	Cash	39600		=40000*0.99
	Discount on Bonds payable	400
	Bonds payable		40000
		Debit	Credit
Jan 01	Cash	41400		=40000*1.035
	Bonds payable		40000
	Premium on Bonds payable		1400
2
	Semiannual cash interest payment	3200		=40000*16%/2