Question

Question 1 Ivanhoe Corporation issued $3.12 million of 7-year, 3% bonds dated January 1, 2021 for $2,755,244. The market interest rate when the bonds were issued was 5%. Interest is payable semi-annually on January 1 and July 1. Ivanhoe has a December 31 year-end. Were the bonds issued at a premium or a discount? Why? Prepare an amortization schedule for the first three interest payments. Prepare the journal entry to record the first interest payment on July 1, 2021. Prepare the journal entry to accrue interest expense on December 31, 2021. Prepare the journal entry to record the second interest payment on January 1, 2022. SHOW ALL CALCULATIONS! Plz answer Asap

Answer 1

Bond is issued at Discount because , Bond of $3120000 , issued on $2755244 which is less than par Value

Bond Amortization Schedule- Ivan hoe Corporation
Year	Cash Interest (1000000*1.5%)	Interest expense (2.5%)		Amortized Discount		Carrying Value
Issue date						2,755,244
30/06/2021	46,800	68,881.10		22,081		2,733,163
31/12/2021	46,800	68,329.07		21,529		2,711,634
30/06/2022	46,800	67,790.85		20,991		2,690,643

Date	Account Tittle	Debit	Credit
1-Jan-21	Cash	$2,755,244.00
	Discount on Bond Payable	$364,756.00
	Bond Payable		$3,120,000.00
1-Jul-21	Interest Expense	$68,881.10
	Discount on Bond Payable		$22,081.10
	Cash		$46,800.00
31-Dec-21	Interest Expense	$68,329.07
	Discount on Bond Payable		$21,529.07
	Interest Payable		$46,800.00