Ike issues $210,000 of 11%, three-year bonds dated January 1, 2015, that pay int

Question

Ike issues $210,000 of 11%, three-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. They are issued at $215,326. Their market rate is 10% at the issue date.

1. Prepare the January 1, 2015, journal entry to record the bonds' issuance.

2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.

3. Prepare an effective interest amortization table for the bonds' first two years.

4. Prepare the journal entries to record the first two interest payments.

5. Prepare the journal entry to record the bonds' retirement on January 1, 2017, at 98.

Required: 1. Prepare the January 1, 2015, journal entry to record the bonds' issuance. view transaction listview general journal Journal Entry Worksheet Record the issue of bonds with a par value of $210,000 cash on January 1, 2015 at an issue price of $215,326. Date General Journal Debit Credit Credit Jan 01, 2015 Enter debits before credits done clear entry record entry

Explanation / Answer

1)Entry for issuance of bonds

2)

6 payments of $11,550                                                   = $69,300

Par value                                                                              210,000

Total                                                                                    $279,300

less:Amount borrowed                                                     $(215,326)

Bond interest expense                                                     $63,974

3)Amortisation Schedule

4)Jouranl entries

5)

jan 1 ,2015 Cash $215,326 To bonds payble $210,000 To Premium on bonds issued      5,326

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