Show Me How Calculator es for issuing bonds and amortizing discount by straight-

Question

Show Me How Calculator es for issuing bonds and amortizing discount by straight-line method ournal Final Questions Journal A. Journalize the entries to record the transactions. Refer to the Chart of Accounts for exact wording of account bitles. PAGE 10 JOURNAL Score: 104/112 DATE POST, RET DEEIT CREDIT Jan. 1 Cash 17,672,074.00 Discount on Bonds Payable 727,926.00 Bonds Payable 18,400,000.00 Jun. 30 interest Expense 1,148,684.00 Cash 736,000.00 Discount on Bonds Payable 9,243.00 Dec. 3, Interest Expense 795,243.00 Cash 736,000.00 Discount on Bonds Payable 59,243.00 Feedback Check My work k My Work

Explanation / Answer

Bond Value 18400000 proceeds from issue 17672074 Discount on issue of bonds 727926 interest payment (cash)Semi anuualy =18400,000*8%*1/2 =$736,000 date Interest payment (cash) Interest expense at market rate @9% Amortisation of Discount Unamortised Discount Bonds Crrying Amount Jan-01                               7,27,926                                1,76,72,074 Jun-30                                                                                       7,36,000                                                                 7,95,243                                                 59,243                               6,68,683                                1,77,31,317 (17672074*0.09*1/2) (795243-736000) (727925-59243.33) (17672074+59243) Dec-31                                                                                       7,36,000                                                                 7,97,909                                                 61,909                               6,06,773                                1,77,93,227 (17731317*0.09*1/2) (797909-736000) (668683-61909) (17731317+61909) Journal entries date Accounts debit Credit Jan-01 cash A/c                                                           1,76,72,074 Discount on issue of bonds A/c                                                                 7,27,926          To Bonds payable A/c                                       1,84,00,000 (being Issue of bonds at doiscount has been reocrded) Jun-30 Interest expense A/c                                                                 7,95,243           To cash A/c                                             7,36,000            To Discount on bonds payable A/c                                                 59,243 (being interest expense has been reocorded) Dec-31 Interest expense A/c                                                                 7,97,909           To cash A/c                                             7,36,000            To Discount on bonds payable A/c                                                 61,909 (being interest expense has been reocorded) (B) Amount of interest Expense for the first year Amount in $ Interest Expense for 1st 6 Months                                                                 7,95,243 Interest Expense for 2nd 6 Months                                                                 7,97,909                                                              15,93,153 (C ) The Bonds sell at less then their face amount because the market rate of interest is greter then the Contract rate of interest rate. Invetors The same as willing to pay the full face amount for the bonds that pay alower contract rate of interest then tare rate they could earn on similar bonds (Market rate)

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