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egg Study Guided S elezto.mheducation.com/hm.tpx ::: Apps BC Hornel Brooklyn Col

ID: 2598626 • Letter: E

Question

egg Study Guided S elezto.mheducation.com/hm.tpx ::: Apps BC Hornel Brooklyn Coll AOL Mail (23) PupilPath Dayforce HCM D cic consumer Servic Mexican Pulled Pork 9 On January 1, 2013, Boston Enterprises issues bonds that have a $1,650,000 par value, mature in 20 years, and pay 10% interest semiannually on June 30 and December 31 . The bonds are sold at par 1. How much interest will Boston pay (in cash) to the bondholders every six months? Par (maturity) Value Semia nnualSemiannual Cash Interest Payment Rate : 2, Prepare iournal entries for the follawing

Explanation / Answer

Answer 1:

Par (maturity) Value * Semiannual Rate = Semiannual Cash Interest Payment
$1,650,000 * (10%*1/2) = Semiannual Cash Interest Payment
$1,650,000 * 5% = Semiannaul Cash Interest Payment
$82,500 = Semiannual Cash Interest Payment

Answer 2:

(a)   Journal Entry for issue of bond

Date

General Journal

Debit

Credit

Jan 01, 2013

Cash

       Bonds Payable

1,650,000

1,650,000

(b) Journal Entry for First Interest payment

Date

General Journal

Debit

Credit

June 30, 2013

Bond Interest Payable

            Cash

82,500

82,500

(c) Journal Entry for Second Interest payment

Date

General Journal

Debit

Credit

Dec 31, 2013

Bond Interest Payable

            Cash

82,500

82,500

Answer 3:

(a) Journal Entry

Date

General Journal

Debit

Credit

Jan 01, 2013

Cash

Discount on Bonds Payable

        Bonds Payable

1,567,500

82,500

1,650,000

(b) Journal Entry

Date

General Journal

Debit

Credit

Jan 01, 2013

Cash

        Premium on Bonds Payable

        Bonds Payable

1,732,500

82,500
1,650,000

Date

General Journal

Debit

Credit

Jan 01, 2013

Cash

       Bonds Payable

1,650,000

1,650,000