Danny's Hamburger issued 7%, 10-year bonds payable at 75 on December 31, 2016. At December...
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Danny's Hamburger issued 7%, 10-year bonds payable at 75 on December 31, 2016. At December 31, 2018, Danny reported the bonds payable as follows: Long-term Liabilities: Bond Payable $400,000 Less: Discount on Bond Payable $80,000
$320,000
Danny's pays semiannual interest each June 30 and December 31 (Assume bonds payable are amoritized using the straight-line amortization method)
Requirement 1. Answer the following questions about Danny's bond payable: a. What is the maturity value of the bond? b. What is the carrying amount of the bonds at December 31, 2018? c. What is the semiannual cash interest payment on the bonds? d. How much interest expense should the company record each year? Requirement 2. Record the June 30, 2018, semiannual interest payment and amortization of the discount. (Record debits first, then credits. Include an expanation at bottom of the jounal entry.)
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