Question

On January 1, 2018, Universe of Fun issues $850,000, 7% bonds that mature in 15 years....

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.)

Homework Answers

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
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