Question

On January 1, 2018, Splash City issues $460,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year.

Assuming the market interest rate on the issue date is 9%, the bonds will issue at $422,536

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

2. Record the bond issue on January 1, 2018, and the first two semiannual interest payments on June 30, 2018, and December 31, 2018. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Amort Chart:
period	Cash Int	Int exp	Discount	Unamortized	Carrying
			Amortized	Discount	value
01.01.18				37464	422536
30.06.18	18400	19014	614	36850	423150
31.12.18	18400	19042	642	36208	423792
30.06.19	18400	19071	671	35537	424463
Journal entries:
Date	Accounts title and explanations				debit $	Credit $
01.01.18	Cash accouunt				422536
	Discount on bonds payable				37464
	Bonds payable					460000
30.06.18	Interest expennse				19014
	Cash accouunt					18400
	Discount on bonds payable					614
31.12.18	Interest expennse				19042
	Cash accouunt					18400
	Discount on bonds payable					642