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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
Expert Answer
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
