Bond Discount, Entries for Bonds Payable Transactions
On July 1, 2014, Brower Industries Inc. issued $8,000,000 of 10-year, 9% bonds at a market (effective) interest rate of 10%, receiving cash of $7,501,511. Interest on the bonds is payable semi-annually on December 31 and June 30. The fiscal year of the company is the calendar year.
2. Journalize the entries to record the following: For a compound transaction, if an amount box does not require an entry, leave it blank.
a. The first semi-annual interest payment on December 31, 2014, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.)
Interest Expense:
Discount on Bonds:
Cash:
b. The interest payment on June 30, 2015, and the amortization of the bond discount, using the straight-line method. (Round to the nearest dollar.
Interest Expense:
Discount on Bonds:
Cash: