the transactions of Laporte Communications Inc Record debits

the transactions of Laporte Communications Inc (Record debits first then credits Exclude exolanations from a any j Requirements Journalize the transactions of Laporte Communications, Inc. At December 31, 2014, after all year-end adjustments, determine the carrying amount of Laporte Communications bonds payable, net. For the six months ended July 1, 2014, determine the following for Laporte Communications, Inc.: a. Interest expense b. Cash interest paid 1. 2. 3. What causes interest expense on the bonds to exceed cash interest paid? ual Print Done ny number in the input fields and then continue to the next question

Solution

Requirement 1 Date                              Accounts                                        Debit Credit 1/1/2014 Cash           (8,000,000*.95) 7600000 Discount on bonds payable 400,000 Bonds payable 8,000,000 1/7/2014 interest expense 260,000 Discount on bonds payable (400,000/20) 20000 Cash                                        (8,000,000*3%) 240000 12/31/2014 interest expense 260,000 Discount on bonds payable (400,000/20) 20,000 interest payable 240,000 1/1/2015 interest payable 240,000 cash 240,000 1/1/2024 Bonds payable 8,000,000 interest payable 240,000 cash 8,240,000 Requirement 2 Carrying value of bonds (8,000,000 - 360,000) 7,640,000 Requirement 3 a. interest expense 260,000 b. Cash interest paid 240,000 when the bonds are issued at discount that is when the market value of bonds exceeds the stated value of bonds