Don't use plagiarized sources. Get Your Custom Essay on
GET AN ESSAY WRITTEN FOR YOU FROM AS LOW AS \$13/PAGE

Show transcribed image textvalue: 30.00 points Legacy issues \$680,000 of 6.5%, four-year bonds dated January 1, 2013, that pay interest semiannually on June 30 and December 31, They are issued at \$603,061 and their market rate is 10% at the issue date. 1. Prepare the January 1, 2013, journal entry to record the bonds’ issuance View transaction list Journal entry worksheet Record the issue of bonds with a par value of \$680,000 cash on January 1, 2013 at an issue price of \$603,061 Note: Enter debits before credits. Date General Journal Debit Credit Jan. 1,2013 Cash 603,061 76,939 iscount on bonds payable Bonds payable 680,000 Record entry Clear entry View general journal

3. Bond Amortization Table : ( Effective interest method)

 Semiannual Interest Period End Cash Interest Paid Bond Interest Expense Discount Amortization Unamortized Discount Carrying Value \$ \$ \$ \$ \$ 01/01/2013 – – – 76,939 603,061 06/30/2013 22,100 30,153.051 8,053.052 68,885.95 611,114.05 12/31/2013 22,100 30,555.703 8,455.704 60,430.25 619,569.75 06/30/2014 22,100 30,978.49 8,878.49 51,551.76 628,448.24 12/31/2014 22,100 31,422.41 9,322.41 42,229.35 637,770.65

Journal entries:

 Date General Journal Debit Credit \$ \$ June 30, 2013 Interest Expense 30,153.05 Cash 22,100 Discount on bonds payable 8,053.05 December 31, 2013 Interest Expense 30,555.70 Cash 22,100 Discount on bonds payable 8,455.70

Workings :

1. Interest expense, period 1 = \$ 603,061 x 10% x 1/2 = \$ 30,153.05

2. Discount amortization, period 1 = \$ 30,153.05 – \$ 22,100 = \$ 8,053.05

3. Interest expense, period 2 = \$ ( 603,061 + 8,053.05) x 5% = \$ 30,555.70

4. Discount amortization, period 2 = \$ 30,555.70 – \$ 22,100 = \$ 8,455.70