Question

Watch Soccer LIV. Net YouTube Jokerlivestream.- Seved na streams rod Help Save & Ear Submit Check my work Required information The following information applies to the questions displayed below.) On January 1, 2021, Twister Enterprises, a manufacturer of a variety of transportable spin rides, issues $490,000 of 8% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year. 2. If the market interest rate is 9%, the bonds will issue at $458,131. Record the bond issue on January 1, 2021, and the first two semiannual interest payments on June 30, 2021, and December 31, 2021. (if no entry is required for a particular transaction/event select "No Journal Entry Required" in the first account field. Round your answers to the nearest dollar amount.) View transaction list Journal entry worksheet Record the first semiannual interest payment. < Prey. 23 of 7 !! Next >

Answer 1

Journal Entry Debit Credit Date Account Title Ans 1 Jan 1, 2021. $458,131 Cash Discount on Bond Payable $31,869 Bond Payable $490,000 (To record issuance of bond at discount) Interest Expense Ans 2 Jun 30,2021. $20,616 Discount on Bond Payable $1,016 $19,600 Cash (To record interest payment and discount amortisation) Interest Expense Ans 3 Dec 31,2021 $20,662 Discount on Bond Payable $1,062 $19,600 Cash (To record interest payment and discount amortisation) Amortisation Schedule (Effective Interest) The effective interest rate is also called as market rate. It is the investor's yield maturity. When the effective interest rate is higher/Lower as compared bond coupon rate then, the bonds were issued at a discount/premium. The Discount/Premium is then amortised over the period of bond by using effective interest rate method. Under this method, interest expense is derived by multiplying the bond carrying value with the effective interest rate applicable when the bonds were issued. The difference between the interest expense and actual interest paid is the discount/premium which will be amortised Amortisation schedule ( Effective Interest Method) Closing Book Cash Payment Amortisation of Opening book Balance Interest Expense Date $490000 x 8%/2 Bond Discount Value (D) (C)-(B) (A) (B) (C)-(A) x 4.50% (A)+(C)-(B) $458,131 Jan 1, 2021 Jun 30,2021 Dec 31,2021 $458,131 $19,600 $19,600 $20,616 $20,662 $1,016 $459,147 $459,147 $1,062 $460,209