Question

On January 1, a company issues bonds dated January 1, 2018 with a par value of $300,000. The bonds mature in 5 years. The contract rate is 9%, and interest is paid annually on December 31. The bonds are sold for $312,200. The journal entry to record the first interest payment using straight-line amortization is:

Muheet Corporation issues $550,000, 10%, 5-year bonds on January 1, 2019 for $489,000. Interest is paid annually on January 1. If Muheet Corporation uses the straight-line method of amortization of bond discount, the amount of interest expense recorded at December 31, 2019 would be:
Select one:
a. $55,000.
b. $42,800.
c. $61,000.
d. $67,200.

Please Solve As soon as
Solve quickly I get you two UPVOTE directly
Thank's
Abdul-Rahim Taysir

Answer 1

1]
31-Dec	Interest expense	$            24,560
	Premium on bonds payable [12200/5]	$              2,440
	Cash [300000*9%]		$          27,000
	[To record payment of first interest]
2]	MUTHEET CORPORATION:
	Coupon payment = 550000*10% =	$            55,000
	Add: Discount amortized = (550000-489000)/5 =	$            12,200
	Interest expense	$            67,200
	Answer: [d] $67,200