On january 31 2018 b corp issued 600000 face value 12

On January 31, 2018, B Corp. issued $600,000 face value, 12% bonds for $600,000
cash. The bonds are dated December 31, 2017, and mature on December 31, 2027.
Interest will be paid semiannually on June 30 and December 31.
What amount of accrued interest payable should B report in its September 30,
2018, balance sheet?
On January 1, 2018, Legion Company sold $200,000 of 10% ten-year bonds. Interest
is payable semiannually on June 30 and December 31. The bonds were sold for
$177,000, priced to yield 12%. Legion records interest at the effective rate.
Legion should report bond interest expense for the six months ended June 30, 2018,
in the amount of:

On January 1, 2018, Solo Inc. issued 1,000 of its 8%, $1,000 bonds at 98. Interest is
payable semiannually on January 1 and July 1. The bonds mature on January 1,
2028. Solo paid $50,000 in bond issue costs. Solo uses straight-line amortization.
What is the carrying value of the bonds reported in the December 31, 2018, balance
sheet?
Example:
On January 1, 2018, Solo Inc. issued 1,800 of its 9%, $1,000 bonds at 97.7. Interest is payable
semiannually on January 1 and July 1. The bonds mature on January 1, 2028. Solo paid $59,000 in
bond issue costs. Solo uses straight-line amortization. What is the carrying value of the bonds
reported in the December 31, 2018, balance sheet?

Discount on issue of bond = $1,800,000 - $1,758,600 = $41,400
Bond issue cost = $59,000
Amortization of disount for 2018 = $41,400 / 10 = $4,140
Amortization of issue cost for 2018 = $59,000 / 10 = $5,900
Unamortized discount at the end of 2018 = $41,400 - $4,140 = $37,260
Unamortized issue cost at the end of 2018 = $59,000 - $5,900 = $53,100
Carrying value of bond reported in December 31, 2018 = Face value of bond - Unamortized discount
- Unamortized issue cost
= $1,800,000 - $37,260 - $53,100 = $1,709,640
On January 1, 2018, Bishop Company issued 10% bonds dated
January 1, 2018, with a face amount of $20 million. The bonds
mature in 2027 (10 years). For bonds of similar risk and maturity,
the market yield is 12%. Interest is paid semiannually on June 30
and December 31. ( FV of $1 , PV of $1 , FVA of $1 , PVA of $1 , FVAD of
$1 and PVAD of $1 ) (Use appropriate factor(s) from the tables
provided. Round your intermediate calculations to the
nearest whole dollar. Enter your answers in whole dollars.)
Required:
1. Determine the price of the bonds at January 1, 2018.
2. Prepare the journal entry to record the bond issuance by Bishop
on January 1, 2018.
3. Prepare the journal entry to record interest on June 30, 2018,
using the effective interest method.
4. Prepare the journal entry to record interest on December 31,
2018, using the effective interest method.

2.
3.
4.
Explanation
1.
Interest $1,000,000 × 11.46992 $ 11,469,920
Principal $20,000,000 × 0.31180 6,236,000
$ 17,705,920
3.

Interest expense (6% × $17,705,920) = $1,062,355
Cash (5% × $20,000,000) = $1,000,000
4.
Interest expense [6% ($17,705,920 + $62,355)] = $1,066,097