Question

On January 1, 2017, Boston Enterprises issues bonds that have a $1,200,000 par value, mature in 20 years, and pay 9% interest semiannually on June 30 and December 31. The bonds are sold at par. 1. How much interest will Boston pay (in cash) to the bondholders every six months? 2. Prepare journal entries to record (a) the issuance of bonds on January 1, 2017; (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017 3. Prepare the journal entry for issuance assuming the bonds are issued at(a) 98 and (b) 102 Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 How much interest will Boston pay (in cash) to the bondholders every six months? Par (maturity) Value Value Semiannual Rate Semiannual Cash Interest Payment Required 2 >

need help answering the questions ...thanks

Answer 1

1
	1,200,000 x 9% x 1/12	54,000
2
	a
Date	General Journal	Debit	Credit
1-Jan	Cash	1,200,000
	Bonds payable		1,200,000
	b
30-Jun	Bond interest expense	54,000
	Cash		54,000
	c
31-Dec	Bond interest expense	54,000
	Cash		54,000
3
a	Cash 1200000*.98	1,176,000
	Discount on bonds payable	24,000
	Bonds payable		1,200,000
b	Cash	1,224,000
	Premium on bonds payable		24,000
	Bonds payable		1,200,000