side issues S4,000,000 of 6% 15-year bonds dated January 1, 2017, that pay inter

Question

side issues S4,000,000 of 6% 15-year bonds dated January 1, 2017, that pay interest semiannually on lune 30 and December 31. The bonds are issued at a price of $3,456.448. Required 1. Prepare the January 1, 2017. journal entry to record the bonds' issuance. 2. For each semiannual period, compute (a) the cash payment, (b) the straight-line discount amortization, Problem 14-2A annual interest is of bond discount P1 P2 rating lease or a and (c) the bond interest expense. 3. Determine the total bond interest expense to be recognized over the bonds' life. Check (3) $4,143,552 t has a five-year

Explanation / Answer

a) Journal entry :

b) Cash payment on interest = (4000000*6%*6/12) = 120000

Straight line discount on bonds amortization = (543552/30) = 18118.40

Interest expense = 138118.40

c) Total interest expense for period = (4000000*6%*15) = 3600000+543552 = 4143552

Date accounts & explanation debit credit Jan 1,2017 Cash 3456448 Discount on bonds payable 543552 Bonds payable 4000000 (To record issue bonds payable

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