Question

Mellilo Corporation issued $4,400,000 of 20-year, 9.5 percent bonds on July 1, 2018, at 98. Interest is due on June 30 and December 31 of each year, and all of the bonds in the issue mature on June 30, 2038. Mellilo's fiscal year ends on December 31.

1. Record the issuance of bonds.

2. Record the payment of interest and amortize bond discount.

3. Record the final interest payment and amortize bond discount.

4. Record the retirement of bonds at maturity.

Answer 1

July 01, 2018	Cash	4312000		=4400000*0.98
	Discount on bonds payable	88000
	Bonds payable		4400000
Dec.31, 2018	Bond interest expense	211200
	Discount on bonds payable		2200	=88000/40
	Cash		209000	=4400000*9.5%/2
June 30, 2038	Bond interest expense	211200
	Discount on bonds payable		2200	=88000/40
	Cash		209000	=4400000*9.5%/2
June 30, 2038	Bonds payable	4400000
	Cash		4400000