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[The following information applies to the questions displayed below.]

On January 1, 2024, Splash City issues $320,000 of 8% bonds, due in 15 years, with interest payable semiannually on June 30 and December 31 each year.

Assuming the market interest rate on the issue date is 9%, the bonds will issue at $293,938.

2. Record the bond issue on January 1, 2024, and the first two semiannual interest payments on June 30, 2024, and December 31, 2024.

(Interest Expense does not equal 12800)

User Decebal
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To record the bond issue on January 1, 2024, and the first two semiannual interest payments on June 30, 2024, and December 31, 2024, we need to consider the issuance of the bonds and the accrual of interest expense.

1. Bond Issue on January 1, 2024:

Date Account Debit Credit

--------------------------------------------------------

January 1, 2024 Cash $293,938

Bonds Payable $320,000

To record the issuance of $320,000 face value bonds at a discounted price of $293,938.

2. Semiannual Interest Payment on June 30, 2024:

Date Account Debit Credit

--------------------------------------------------------

June 30, 2024 Interest Expense $14,400

Cash $14,400

To record the semiannual interest payment ($320,000 * 8% / 2 = $12,800) for the period from January 1, 2024, to June 30, 2024.

3. Semiannual Interest Payment on December 31, 2024:

Date Account Debit Credit

--------------------------------------------------------

December 31, 2024 Interest Expense $14,400

Cash $14,400

To record the semiannual interest payment ($320,000 * 8% / 2 = $12,800) for the period from July 1, 2024, to December 31, 2024.

Please note that the interest expense amount mentioned in the question might be incorrect. Based on the information provided, the interest expense should be $12,800 for each semiannual interest payment, resulting in a total of $25,600 for the year 2024.

User Eugene Petrov
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