Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2013, that pay in
ID: 2550509 • Letter: L
Question
Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. They are issued at $292,181 and their market rate is 8% at the issue date.
Prepare a straight-line amortization table for the bonds' first two years.
Prepare the journal entries to record the first two interest payments.
Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31. They are issued at $292,181 and their market rate is 8% at the issue date.
3.Prepare a straight-line amortization table for the bonds' first two years.
Semiannual Period-End Unamortized Discount Carrying Value 01/01/2013 $32,819 $292,181 06/30/2013 29,257 12/31/2013 06/30/2014 12/31/2014Explanation / Answer
Prepare a straight-line amortization table for the bonds' first two years.
Semiannual Period-End
Amortiszed discount
Unamortized Discount
Carrying Value
1/1/2013
$32,819.00
$292,181.00
6/30/2013
$4,102.38
$28,716.63
$296,283.38
12/31/2013
$4,102.38
$24,614.25
$300,385.75
6/30/2014
$4,102.38
$20,511.88
$304,488.13
12/31/2014
$4,102.38
$16,409.50
$308,590.50
Journal entries
Date
Particulars
Debit
Credit
30-Jun-13
Bond interest expense
(325,000*5%*6/12)
$8,125.00
Discount on bond amortization
$4,102.38
To Discount on bonds payable
$4,102.38
To Cash
$8,125.00
Date
Particulars
Debit
Credit
31-Dec-13
Bond interest expense
(325,000*5%*6/12)
$8,125.00
Discount on bond amortization
$4,102.38
To Discount on bonds payable
$4,102.38
To Cash
$8,125.00
Prepare a straight-line amortization table for the bonds' first two years.
Semiannual Period-End
Amortiszed discount
Unamortized Discount
Carrying Value
1/1/2013
$32,819.00
$292,181.00
6/30/2013
$4,102.38
$28,716.63
$296,283.38
12/31/2013
$4,102.38
$24,614.25
$300,385.75
6/30/2014
$4,102.38
$20,511.88
$304,488.13
12/31/2014
$4,102.38
$16,409.50
$308,590.50
Journal entries
Date
Particulars
Debit
Credit
30-Jun-13
Bond interest expense
(325,000*5%*6/12)
$8,125.00
Discount on bond amortization
$4,102.38
To Discount on bonds payable
$4,102.38
To Cash
$8,125.00
Date
Particulars
Debit
Credit
31-Dec-13
Bond interest expense
(325,000*5%*6/12)
$8,125.00
Discount on bond amortization
$4,102.38
To Discount on bonds payable
$4,102.38
To Cash
$8,125.00
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