10.00 points On January 1, 2011, Bartel Enterprises issues bonds that have a $3,

Question

10.00 points On January 1, 2011, Bartel Enterprises issues bonds that have a $3,650,000 par value, mature in 20 years, and pay 10% interest semiannually on June 30 and December 31. The bonds are sold at par. (Assume no reversing entries are used. Omit the "" sign in your response.) How much Intenest will Bartel payn cash) to the bondholders every si months Requirement 2: Prepare jourmal entries to record ) the issuance of bonds on January 1, 2011 Jan. 1 2011 b) the first interest payment on June 30, 2011 Debit lc) the second interest payment on December 31, 2011 Dec 31 2011 Prepare the journal entry for issuance of bonds assuming (a) the bonds are issued at 98 General Joumal Ja 12011 (Click to (b) the bonds are issued at 105 General Journal

Explanation / Answer

1) Semiannual cash interest payament = $3650000 x 10% x 5% = $182500

Note:

a) Cash received on issuance of bond at $98 = (98/100)*3650000 = $3577000

b) Cash received on issuance of bond at $105 = (105/100)*3650000 = $3832500

2) Account Title & explanations debit ($) credit ($) a) Cash 3650000 Bonds Payable 3650000 b) Interest Expense 182500 Cash 182500 c) Interest Expense 182500 Cash 182500 3) a) Cash 3577000 Discount on bonds payable 73000 Bonds Payable 3650000 b) Cash 3832500 Premium on bonds payable 182500 Bonds Payable 3650000

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