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Question

463% Connect com/flow/c SPN Welcome to onie I UTSA Apple Disney Yahoo! Outdoor Wor 8-5 Circuit Fingerhut Help Save & Exit Submit Check my work On January 1, 2017, Boston Enterprises issues bonds that have a $2.150,000 par value, mature in 20 years, and pay 6% interest semiannually on June 30 and December 31. T The bonds are sold at par 1. How much interest will Boston pay ün cash) to the bondholders every six months epare journal entries to record (a) the issuance of bonds on January 1, 2017: (b) the first interest payment on June 30, 2017; and (c) the second interest payment on December 31, 2017, 3. Pr pepar teu en tosssming the bonds are issued at 60 97and)03 Complete this question by entering your answers in the tabs below Required 1 Required 2 Required 3 How much interest will Boston pay (in cash) to the bondholders every six months? (maturityl ,, 888 va 3 4 5 7 8 9

Explanation / Answer

Answer 1

Semi annual cash interest payment = Par (maturity) value x Semi annual interest rate

= 2,150,000 x 6% x 6/12 = $64,500

Answer 2

6% Bonds (Payable in 20 years)

Interest payable

Cash

Interest payable

Cash

Answer 3

Bonds issued at $97

6% Bonds (Payable in 20 years)

Bonds issued at $103

6% Bonds (Payable in 20 years)

Premium on Bonds issued

Date General Journal Debit Credit January 1, 2017 Cash 21,50,000

6% Bonds (Payable in 20 years)

21,50,000 (Being 21,500 bonds maturing in 20 years issued at par value of $100 with coupon at 6%) June 30, 2017 Interest expense 64,500

Interest payable

64,500 (Being semi annual interest payable on bonds) June 30, 2017 Interest payable 64,500

Cash

64,500 (Being semi-annual interest paid on bonds) December 31, 2017 Interest expense 64,500

Interest payable

64,500 (Being semi annual interest payable on bonds) December 31, 2017 Interest payable 64,500

Cash

64,500 (Being semi-annual interest paid on bonds)

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