Question

Required information The following information applies to the questions displayed below) Legacy issues $600,000 of 70%, four year bonds dated January 1, 2017 that pay interest semiannually on June 30 and December 31 They are issued at $541,807 and their market rate is 10% at the issue dote 3. Prepare a straight-line amortization table for the bonds' first two years. Answer is complete but not entirely correct. Semiannual Unamortized Carrying Period End Discount Value 01/01/2017 $ 58,193 $ 541,807 06/30/2017 52 1033 547,897 12/31/2017 45.708 554,292 06/30/2018 38.993 561,007 12312019 31,943 568,057

Answer 1

Requirement 3

Semiannual Period-End	Unamortized Discount	Carrying Value
01/01/2017	$               58,193	$            541,807
06/30/2017	$               50,919	$            549,081
12/31/2017	$               43,645	$            556,355
06/30/2018	$               36,371	$            563,629
12/31/2018	$               29,097	$            570,904

Requirement 4

No	Date	General Journal	Debit
1	Bond interest expense	$              28,274
	Discount on bonds payable		$                    7,274
	Cash		$                  21,000
	(To record bond interest)
2	Bond interest expense	$              28,274
	Discount on bonds payable		$                    7,274
	Cash		$                  21,000
	(To record bond interest)

Working

Bond issue price	$ 541,807
Face value	$ 600,000
Discount on bonds payable	-$ 58,193
Number of Interest payments (4 years x 2)	8
Discount/ premium to be amortized per Half year	$ 7,274
Cash Interest on bond (600000 x 3.5%)	$ 21,000
Interest expense to be recorded (21000+7274)	$ 28,274