Question

Malcolm Company borrowed money by issuing $4,000,000 of 4% bonds payable at 102.7 on July 1, 2018. The bonds are five-year bonds and pay interest each January 1 and July 1. Read the requirements. 1. How much cash did Malcolm receive when it issued the bonds payable? Journalize this transaction. Malcolm received $ when the bonds payable were issued. i Requirements 1. How much cash did Malcolm receive when it issued the bonds payable? Journalize this transaction. 2. How much must Malcolm pay back at maturity? When is the maturity date? 3. How much cash interest will Malcolm pay each six months? How much interest expense will Malcolm report each six months? Use the straight-line amortization method. Journalize the entries for the accrual of interest and the amortization of premium on December 31, 2018, and payment of interest on January 1, 2019. Print Done

Answer 1

1)	4,000,000*102.7%
	4108000
2)	4,000,000
3)	4,000,000*4%*1/2
	80000
4)	interest expense
	80,000-(108000/10)
	69200
	Date	Account titles & Explanations				Debit	Credit
	12/31/2018	interest expense				69,200
		premium on bonds payable				10800
		interest payable					80,000
	1/1/2019	interest payable				80,000
		cash					80,000