Business, 15.04.2020 00:35 jilliynr9507
On June 30, 2020, Riverbed Company issued $3,340,000 face value of 14%, 20-year bonds at $3,842,540, a yield of 12%. Riverbed uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.
Prepare the journal entries to record the following transactions:
The payment of interest and the amortization of the premium on June 30, 2020.
Interest Expense 257,939
Premium on Bonds Payable 2,061
Cash 260,000
Carrying Value = $4,300,920 - $1,945 = $4,298,975
Interest Expense = $4,298,975 x 12% x 6/12 months = $257,939
The payment of interest and the amortization of the premium on December 31, 2020.
Interest Expense 257.815
Premium on Bonds Payable 2,185
Cash260,000
Carrying Value = $4,298,975 - $2,061 = $4,296,914
Interest Expense = $4,296,914 x 12% x 6/12 months = $257,815
Answers: 3
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On June 30, 2020, Riverbed Company issued $3,340,000 face value of 14%, 20-year bonds at $3,842,540,...
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