Journal entries: | ||||||||
Date | Accounts title and explanations | Debit $ | Credit $ | |||||
01.01.17 | Cash account | 3456448 | ||||||
Discount on bonds payable | 543552 | |||||||
Bonds payable | 4000000 | |||||||
Maturity value * | Annual rate* | Period = | Semi annual cash int | |||||
4000000 * | 6% * | 00.5 = | 120000 | |||||
Maturity value- | Bonds price = | Discount / | Periods = | Straight line disccount amortized | ||||
4000000 - | 3456448 = | 543552 / | 30 = | 18118.4 | ||||
Semi annual cash int + | Disount amortized = | Interest expense | ||||||
120000 + | 18118.40 = | 138118.4 | ||||||
Amount repaid: | ||||||||
30 payment of 120000 each | 3600000 | |||||||
Par value of matrity | 4000000 | |||||||
Amount repaid: | 7600000 | |||||||
Less: Amount borrowed | 3456448 | |||||||
Total interest | 4143552 | |||||||
Amort Chart: | ||||||||
Period | Cash int | Discount | Interest expense | |||||
Amortized | ||||||||
30.06.17 | 120000 | 18118.4 | 138118.4 | |||||
31.12.17 | 120000 | 18118.4 | 138118.4 | |||||
30.06.18 | 120000 | 18118.4 | 138118.4 | |||||
31.12.18 | 120000 | 18118.4 | 138118.4 | |||||
Journal entries for Interest expense: | ||||||||
Date | Accounts title and explanations | Debit $ | Credit $ | |||||
30.06.17 | Interest expenses | 138118.4 | ||||||
Cash account | 120000 | |||||||
Discount on bonds payable | 18118.4 | |||||||
31.12.17 | Interest expenses | 138118.4 | ||||||
Cash account | 120000 | |||||||
Discount on bonds payable | 18118.4 | |||||||
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