b) What is the bonds’ face value? c) What will the bonds’ carrying amount be at the maturity date? d) What will be the total interest payments over the five-year life of the bonds? Total interest expense? e) Prepare the journal entry to record the issuance of the bond. f) Prepare the journal entry for the first three interest payments. g) Prepare the adjusting journal entry on December 31, 2023, assuming this is King’s year end. h) Prepare the journal entry for the payment of interest on April 1, 2024. Assume no reversing entries have been used.
Question.
On April 1, 2023, King Company issued $400,000 of 5-year bonds. Interest is paid semi-annually on April 1 and October 1.
Here is a partial amortization schedule for the first few years of the bond issue.
| Interest Payment | Interest Expense | Amortization | Carrying Amount of Bonds | |
| Apr. 1, 2023 | $418,444 | |||
| Oct. 1, 2023 | $8,000 | $6,277 | $1,723 | 416,721 |
| Apr. 1, 2024 | 8,000 | 6,251 | 1,749 | 414,972 |
| Oct. 1, 2024 | 8,000 | 6,225 | 1,775 | 413,197 |
| Apr. 1, 2025 | 8,000 | 6,198 | 1,802 | 411,395 |
| Oct. 1, 2025 | 8,000 | 6,171 | 1,829 | 409,566 |
| Apr. 1, 2026 | 8,000 | 6,143 | 1,857 | 407,709 |
b) What is the bonds’ face value?
c) What will the bonds’ carrying amount be at the maturity date?
d) What will be the total interest payments over the five-year life of the bonds? Total interest expense?
e) Prepare the
f) Prepare the journal entry for the first three interest payments.
g) Prepare the
h) Prepare the journal entry for the payment of interest on April 1, 2024. Assume no reversing entries have been used.
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