Question

On December 31, 2018, Spearmint, Inc., issued $450,000 of 9 percent, 3-year bonds at a premium of $11,795. The bonds pay interest semiannually. Spearmint uses the straight-line bond amortization method. The entry to record each interest payment includes a debit to Bond Interest Expense for $18,284, a debit to Premium on Bonds Payable for $1,966, and a credit to Cash for $20,250. At June 30, 2019, the carrying value of the bonds will equal _____.

Answer 1

a debit to Premium on Bonds Payable for $1,966, and a credit to Cash for $20,250.

Step-by-step explanation:

450,000 bonds face vbalue

11,795 premium

450,000 x 0.09/2 = 20,250 cash procceds

11,795/ 6 = 1,965.83333 = 1,966 premium amortization