Chapter 12, Problem 12.32AP

Analyzing, journalizing, and reporting bond transactions

Bob's Hamburgers issued 8%, 10-year bonds payable at 70 on December 31, 2016. At December 31, 2018, Bob reported the bonds payable as follows:

Long-term Liabilities :
Bonds Payable	$ 300,000
Less: Discount on Bonds Payable	72,000	$ 228,000

Bob's pays semiannual interest each June 30 and December 31.

Requirements

1. Answer the following questions about Bob's bonds payable:

a. What is the maturity value of the bonds?

b. What is the carrying amount of the bonds at December 31, 2 018?

c. What is the semiannual cash interest payment on the bonds?

d. How much interest expense should the company record each year?

2. Record the June 30, 2018, semiannual interest payment and amortization of discount.