(L.OBJ. 5, 6, 7) Analyzing, journalizing, and reporting bond transactions [30 min] Capt...

(L.OBJ. 5, 6, 7) Analyzing, journalizing, and reporting bond transactions [30 min]

Captain Billy Whirlywhirl Hamburgers issued 7%, 10-year bonds payable at 70 on December 31, 2010. At December 31, 2012, Captain Billy reported the bonds payable as follows:

Captain Billy Whirlywhirl uses the straight-line amortization method and pays semi-annual interest each June 30 and December 31.

Requirements

1. Answer the following questions about Captain Billy Whirlywhirl's bonds payable:

a. What is the maturity value of the bends?

b. What is the carrying amount of the bonds at December 31, 2012?

c. What is Captain Billy Whirlywhirl’s annual cash interest payment on the bonds?

d. How much interest expense should Captain Billy Whirlywhirl record each year?

2. Record the June 30, 2013, semiannual interest payment and amortization of discount.

3. What will be the carrying amount of the bonds at December 31, 2013?