Legacy issues $580,000 of 8.0%, four-year bonds dated January 1, 2013, that pay

Question

Legacy issues $580,000 of 8.0%, four-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. They are issued at $507,959 and their market rate is 12% at the issue date.

4. Prepare the journal entries to record the first two interest payments. view transaction list view general journal Journal Entry Worksheet Record the first interest payment on June 30, 2013. Date General Journal DebitCredit Jun 30, 2013 *Enter debits before credits done clear entry record entry

Explanation / Answer

Date Account Title Dr Cr 30-Jun-13 Interest Expense $30478 Cash 23200 Discount on Issue of 4 year bond payable 7278 31-Dec-13 Interest Expense 30914 Cash 23200 Discount on Issue of 4 year bond payable 7714 Date Interest Payment @4% Bond Interest expenses at 6%*G Discount Amortization of Bond C-B Unamortized discount Credit balance in the Bond payable Carrying value of Bond F-E Credit cash Debit Interest Expense Bond Discount 1/1/2013 72041 580000 507959 30-Jun-13 23200 30478 7278 64763 580000 515237 31-Dec-13 23200 30914 7714 57049 580000 522951

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