Question

On January 1, 2018, Universe of Fun issues $850,000, 7% bonds that mature in 15 years. The market interest rate for bonds of similar risk and maturity is 8%, and the bonds issue for $776,509. Interest is paid semiannually on June 30 and December 31.

Required:

1. Complete the first three rows of an amortization schedule.

2. & 3. Record the issuance of the bonds on January 1, the interest payments on June 30, and December 31, 2018. (If no journal entry is required for a transaction, select "No journal entry required" in the first account field. Round your answers to the nearest whole dollar amount.)

Answer 1

1
Date	Cash paid	Interest expense	Increase in Carrying value	Carrying value
1/1/18				776509
6/30/18	29750	31060	1310	777819
12/31/18	29750	31113	1363	779182
2
Jan 1 2018	Cash	776509
	Discount on Bonds payable	73491
	Bonds payable		850000
June 30 2018	Interest expense	31060
	Discount on Bonds payable		1310
	Cash		29750
Dec 31 2018	Interest expense	31113
	Discount on Bonds payable		1363
	Cash		29750