On January 1, 2018, Splash City issues $360,000 of 7% bonds, due in 10 years, wi
ID: 2558399 • Letter: O
Question
On January 1, 2018, Splash City issues $360,000 of 7% bonds, due in 10 years, with interest payable semiannually on June 30 and December 31 each year.
Assuming the market interest rate on the issue date is 8%, the bonds will issue at $335,537.
1. Complete the first three rows of an amortization table.
2. Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Date Cash Paid Interest Expense Increase in carrying value carrying value 1/1/18 6/30/18 12/31/18Explanation / Answer
Date Cash Paid* Interest Exp# Increase in carrying value@ Carrying Value 01-01-18 0 0 0 335537 30-06-18 12600 13421.48 821.48 336358.48 31-12-18 12600 13454.3392 854.3392 337212.8192 * `=360000*7%/2 # `=335537*8%/2, 336358*8%/2 @ `=336358-335537, 337212-336358 2. Journal Entry 01-01-18 Bank A/c Dr 335537 Disc on Bond Payable 24463 to Bond A/c 360000 30-06-18 Interst Expenses 13421 to Disc on Bond Payable 821 to Cash 12600 31-12-18 Interst Expenses 13454 to Disc on Bond Payable 854 to Cash 12600