Prepare partial balance sheet showing bond liability

Response to the following problem:

Round Corporation was authorized to issue $300,000 of bonds. On January 1, 2015, the corporation issued $150,000 of bonds for $147,000. Details of the bond indenture are as follows:

Date of authorization     January 1, 2015

Term                          3 years

Interest rate                12%

Interest payment dates Semi-annually on June 30 and December 31


1. Calculate

a. The amount of interest paid every interest payment date

b. The amount of amortization to be recorded at each interest payment date (use the straight-line method of amortization).

2. Calculate actual interest expense for each six-month period.

3. Prepare the journal entries to record the interest and amortization at June 30, 2015.

4. Prepare a partial balance sheet showing the bond liability and discount on December 31, 2015 and 2016 assuming the bonds will be redeemed on December 31, 2017.

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Financial Accounting: Prepare partial balance sheet showing bond liability
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