Duval Co. issues four-year bonds with a $103,000 par value on June 1, 2015, at a
ID: 2474853 • Letter: D
Question
Duval Co. issues four-year bonds with a $103,000 par value on June 1, 2015, at a price of $99,000. The annual contract rate is 6%, and interest is paid semiannually on November 30 and May 31, value: 0.83 points 1. Prepare an amortization table for these bonds. Use the straight-line method of interest amortization. Round your answers to the nearest dollar amount.) Semiannual Unamortized Carrying Period-End Discount Value 6/01/2015 11/30/2015 5/31/2016 11/30/2016 5/31/2017 11/30/2017 5/31/2018 11/30/2018 5/31/2019Explanation / Answer
2. The journal entry to record the first interest expense and accrued interest as of 31st December 2015 and payment of second interest is as under:
The bond discount is the difference between face value of the bond and the issued value of the bond. Bond discount=Face value-Issued value '=$103,000-$99,000 '=$4,000 Bond discount is amortized in straight line method therefore discount will be divided by 4years Bond discount amortized semiannually=Bond discount/4*2 =$4000/8 =$500 1 Amortizaion table for bond discount is as under: Semiannual period end Unamortized discount carrying value 6/1/2015 4,000 11/30/2015 500 3,500 5/31/2016 500 3,000 11/30/2016 500 2,500 5/31/2017 500 2,000 11/30/2017 500 1,500 5/31/2018 500 1,000 11/30/2018 500 500 5/31/2019 500 -2. The journal entry to record the first interest expense and accrued interest as of 31st December 2015 and payment of second interest is as under:
30th Nov. 2015 Interest Expense $ 3,590 Discount on Bond payable $ 500 Cash $ 3,090 31st Dec. 2015 Interest expenses $ 3,090 Interest payable $ 3,090 31st May 2016 Interest Payable $ 3,090 Interest expense $ 500 Discount on Bond payable $500 Cash $3,090Related Questions
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