Chapter 14, Problem P14.40BPGB

Analyzing, journalizing, and reporting bond transactions
Learning Objectives 2, 3 2. Discount $2,250
Johnny's Hamburgers issued 8%, 10-year bonds payable at 85 on December 31,2018 At December 31,2020, Johnny reported the bonds payable as follows:

Long-term Liabilities:

Bonds Payable
$ 300,000
Less: Discount on Bonds Payable
(36,000) $ 264,000
Johnny pays semiannual interest each June 30 and December 31.

Requirements

1. Answer the following questions about Johnny's bonds payable:
1. What is the maturity value of the bonds?
2. What is the carrying amount of the bonds at December 31,2020?
3. What is the semiannual cash interest payment on the bonds?
4. How much interest expense should the company record each year?
2. Record the June 30, 2020, semiannual interest payment and amortization of discount.