Question - Billy's Hamburgers issued 5%, 10 year bonds at 90 on December 31, 2012. At December 31, 2014, Billy reported the bonds payable as follows.
Long term liabilities:
Bonds Payable 400,000
Less: Discount on Bonds Payable 32,000 368,000
Billy Pays semiannual interest each June 30 and December 31
1. What is the maturity value of the bonds?
2. What is the carrying amount of the bonds at December 31, 2014?
3. What is the semiannual cash interest payment on the bonds?
4. How much interest expense should the company record each year?
5. Record the June 30, 2014, semiannual interest payment and amortization of discount.