On January 1, 2014, Jack Company issues $3,863,000, 6%, 10-year bonds for cash o

Question

On January 1, 2014, Jack Company issues $3,863,000, 6%, 10-year bonds for cash of $3,109,244 when the market rate of interest is 9%. The bonds pay interest semi-annually on June 30 and December 31. Determine (1) the discount on bonds payable at the date of issuance, (2) the semi-annual cash interest payment, (3) the semi-annual discount amortization using the straight line method, and (4) the semi-annual interest expense.

Round your answers to the nearest whole dollar amount.

Feedback

Using the straight line method, the bond discount is amortized over the number of semi-annual interest periods in the bond's life.

Recording in the Accounting System

Journalize the first interest payment and the amortization of the bond discount on June 30, 2014.

Round your answers to the nearest whole dollar amount. If an amount box does not require an entry, leave it blank.

Selling Price of Bonds $ Face Value of Bonds Discount on Bonds Payable $ Cash interest payment $ Discount amortization Interest expense $

Explanation / Answer

Selling Price of Bonds 3109244 Face Value of Bonds 3863000 Discount on Bonds Payable 753756 Cash interest payment 115890 =3863000*6%/2 Discount amortization 37688 =753756/20 Interest expense 153578 Interest Expense 153578      Discount on Bonds Payable 37688      Cash 115890

Related Questions

Navigate

• Browse (All)
• Browse O
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.