Star mart company inc issued $100000 of bonds payable on June 30 2010. The bonds are to be redeemed in five years while paying interest semiannually at the contract rate of 10% each June 30th and December 31st. The market or effective rate of interest is 12%. The amount of cash received initially from the bond issuance was $92640 on June 30,2010.
Instructions
1) Record the initial bond issuance on June 30 2010 in general journal form.
2) Record the first interest payment on December 31, 2010
3) Record the first amortization of the bond discount on December 31,2010. The bond discount is amortized on the straight line method.
4) Record the second interest payment on June 30 2011
5) Record the third interest payment on December 31 2011
6) The company only records the amortization of the bond discount once a year. record the second amortization of the bond discount on
December 31,2011 using the straight line method.
7) In T account form, what is the balance of the unmamorized Discount on Bonds payable at December 31,2011.
8) What is the total interest expense for year 2010
9) What is the total interest expense for the year 2011
10) List the bond carrying value for the bond at December 31 2011