Answers
1)
| Date | General Journal | Debit | Credit |
| January 01 | Cash | $680186 | |
| Discounts on bonds payable (740000-680186) | $59814 | ||
| Bonds payable | $740000 | ||
| (To record bonds issued at discount) | |||
2)
| Total bond interest expense over life of bonds: | |
| Amount repaid | |
| 8 payments of $27750 | $222000 |
| Par value at maturity | 740000 |
| Total repaid | 962000 |
| Less: Amount borrowed | (680186) |
| Total bond interest expense | $281814 |
Interest expense= $740000*7.5%*6/12= $27750
Number of payments= 4*2= 8
3)
| Semiannual Period-End | Unamortized Discount | Carrying Value |
| 01/01/2019 | $59814 | $680186 |
| 06/30/2019 | (59814-7477)= 52337 | (680186+7477)= 687663 |
| 12/31/2019 | (52337-7477)= 44860 | (687663+7477)= 695140 |
| 06/30/2020 | (44860-7477)= 37383 | (695140+7477)= 702617 |
| 12/31/2020 | (37383-7477)= 29906 | (702617+7477)= 710094 |
Discount= $59814/8= $7477
4)
| Date | General Journal | Debit | Credit |
| June 30 | Interest expense ($27750+$7477) | $35227 | |
| Cash ($740000*7.5%*6/12) | $27750 | ||
| Discount on bonds payable ($59814/8) | $7477 | ||
| (To record interest payment and discount amortization) | |||
| December 31 | Interest expense ($27750+$7477) | $35227 | |
| Cash ($740000*7.5%*6/12) | $27750 | ||
| Discount on bonds payable ($59814/8) | $7477 | ||
| (To record interest payment and discount amortization) |
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