Question

Mellilo Corporation issued $4,400,000 of 20-year, 9.5 percent bonds on July 1, 2018, at 98. Interest...

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.

Homework Answers

Answer #1
Jul-1-18 Cash 4312000 =4400000*0.98
Discount on Bonds payable 88000
     Bonds payable 4400000
Dec-31-18 Bond interest expense 211200
     Discount on Bonds payable 2200 =88000/40
     Cash 209000 =4400000*9.5%/2
Jun-30-38 Bond interest expense 211200
     Discount on Bonds payable 2200 =88000/40
     Cash 209000 =4400000*9.5%/2
Jun-30-38 Bonds payable 4400000
     Cash 4400000
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