Question - Suspension Drive Ins Ltd borrowed money by issuing $ 2,000,000 of 8% bonds payable at 97.5 on July 1, 2012. The bonds are 10- year bonds and pay interest each Jan 1 and Jul 1.
1. How much cash did Superior receive when it issued the bonds payable? Journalize this transaction.
2. How much must Superior pay back at maturity? When is the maturity date?
3. How much cash interest will Superior pay each six months?
4. How much interest will Superior report each six months? Assume the straight line amortization method. Journalize the entries for a accrual interest on Dec 31, 2012 and payment of interest on Jan 1, 2013.