T-Mobile LTE 12:48 PM mybusinesscourse.com Menu Adrianna Razo- Bonds Payable Jou

Question

T-Mobile LTE 12:48 PM mybusinesscourse.com Menu Adrianna Razo- Bonds Payable Journal Entries; Effective Interest Amortization On December 31, 2011, Daggett Company issued $1,000,000 of ten-year, 9% bonds payable for $950,232, yielding an effective interest rate of 10%. Interest is payable semiannually on June 30 and December 31 Prepare journal entries to reflect (a) the issuance of the bonds, (b) the semiannual interest payment and discount amortization (effective interest method) on June 30, 2012, and (c) the semiannual interest payment and discount amortization on December 31, 2012. Round amounts to the nearest dollar General Journal Description De Dec.31 Cash To record issuance of bonds.

Explanation / Answer

Effective interest rate 4.50% 5% Year Cash paid Interest expense Discount amortized Discount on bonds bal. Carrying amount At issue 49768 950232 30-06-2012 45000 47512 2512 47256 952744 31-12-2012 45000 47637 2637 44619 955381 30-06-2013 45000 47769 2769 41850 958150 31-Dec-11 Cash 950232 Discount on bonds 49768            Bonds payable 1000000 30-06-2012 Interest expense 47512              Discount on bonds 2512              Cash 45000 31-12-2012 Interest expense 47637              Discount on bonds 2637              Cash 45000

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