More Info Car 2014 Jan Jul Dec 2015 1 1 31 Issued 8000000 of

More Info Car 2014 Jan Jul Dec 2015 1 1 31 Issued $8,000,000 of 6%, 10-year bonds payable at 95, Interest payment dates are July 1 and January 1 Paid semiannual interest and amortized bond discount by the straight-line method on the 6% bonds payable. Accrued semiannual interest expense and amortized bond discount by the straight-line method on the 6% bonds payable. Jan 1 Paid semiannual interest. ntere 2024 Jan 1 Paid the 6% bonds at maturity. Print Done any number in the input fields and then continue to the next question.

Solution

2014

jan1

cash a/c

discount on issue of debentures

to 6% bonds

( being bonds issued at discount)

7600000

400000

interest a/c

to bonds holders

( being interest becomes due)

* 8000000*6%*6/12=240000

bonds holders a/c

to bank

240000

240000

240000

240000

reserves and surplus a/c

to discount on bonds

* (400000/10)*6/12=20000

interest a/c

to interest outstanding

being interest becomes due.

* reserves and surplus a/c

to discount on bonds

being discount written off

240000

20000

240000

20000

2015

jan 1

interest outstanding a/c

to bank

being interest paid

2024

jan 1

6% bonds a/c

to bank

( being bonds paid at maturity.)

2 carrying amount of bonds payable is $8000000

3.a interest expense for the period ended july 1 2014 is 240000( calculated above)

3.b.cash interest paid is 240000

DATE	PARTICULARS	DEBIT	CREDIT
2014 jan1	cash a/c discount on issue of debentures to 6% bonds ( being bonds issued at discount)	7600000 400000	8000000
july 1	interest a/c to bonds holders ( being interest becomes due) * 8000000*6%*6/12=240000 bonds holders a/c to bank	240000 240000	240000 240000
july 1	reserves and surplus a/c to discount on bonds * (400000/10)*6/12=20000	20000	20000
dec 31	interest a/c to interest outstanding being interest becomes due. * reserves and surplus a/c to discount on bonds being discount written off	240000 20000	240000 20000
2015 jan 1	interest outstanding a/c to bank being interest paid	240000	240000
2024 jan 1	6% bonds a/c to bank ( being bonds paid at maturity.)	8000000	8000000