Chapter 14, Problem 1PSB

Problem 14-1B Straight-Line: Amortization of bond discount P2

Romero issues S3.400.000 of 10%. 10-year bonds dated January 1. 2019. that pay interest semiannually on June 30 and December 31. The bonds are issued at a price of $3,010,000.

Required

1. Prepare the January 1 journal entry to record the bonds' issuance.
2. For each semiannual period, compute (a) the cash payment (b) the straight-line discount amortization, and (c) the bond interest expense.
3. Determine the total bond interest expense to be recognized over the bonds' life. Check (3) 13,790,000
4. Prepare the first two years of a straight-line amortization table like Exhibit 14.7. (4) 6/30/2020 carrying value, $3,068,500
5. Prepare the journal entries to record the Erst two interest payments.