straight line method .. Dna issued $4,000,000 in 8% 10 yr bond on feb. 1,2010, a

Question

straight line method ..

Dna issued $4,000,000 in 8% 10 yr bond on feb. 1,2010, at 115. Semiannual interest payment date are january 31 and july31. use staright line method and ignoring year-end accruals..

1. With regard to the bond issue on Februay1,2010:

a) how much cash is received?

b) how much is bond payable ?

c) what is the deifference between a&b called and how much is it?

2. With regard to the bond interest payment on july 31,2010

a) How much cash is paid in interest?

b) How much is the amortization?

c) How much is the interest expense?

3. With regard to the bond interest payment on Januray 31,2011

a) how much cash is paid in interest?

b) how much is the amortization ?

c) how much is interest expense?

please i need a detail answer of each of the question.

I have forgot it, how to do it and wish to learn it again.

Explanation / Answer

1.a) how much cash is received?Cash Received=4000000*115/100=4,600,000.

b) how much is bond payable ?Bond payable = 4,000,000

c) what is the difference between a&b called and how much is it? Difference=600,000 and it is premium on Bond payable

2. With regard to the bond interest payment on july 31,2010

a) How much cash is paid in interest?160000

b) How much is the amortization?30000

c) How much is the interest expense?130000

3. With regard to the bond interest payment on Januray 31,2011

a) how much cash is paid in interest? 160000

b) how much is the amortization ? 30000

c) how much is interest expense? 130000

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