# Discount amortization Using the bond from Practice Exercise 14 -3A , journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar.

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

### Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

#### Solutions

Chapter
Section
Chapter 14, Problem 14.4APE
Textbook Problem

## Discount amortizationUsing the bond from Practice Exercise 14-3A, journalize the first interest payment and the amortization of the related bond discount. Round to the nearest dollar.

Expert Solution
To determine

Bonds: Bonds are long-term promissory notes that are represented by a company while borrowing money from investors to raise fund for financing the operations.

Bonds Payable: Bonds payable are referred to long-term debts of the business, issued to various lenders known as bondholders, generally in multiples of $1,000 per bond, to raise fund for financing the operations. Discount on bonds payable: It occurs when the bonds are issued at a low price than the face value. To prepare: Journal entry to record first interest payment and amortization of discount on bonds. ### Explanation of Solution Prepare journal entry for first interest payment and amortization of discount on bonds.  Date Account Title and Explanation Post Ref Debit ($) Credit ($) Interest Expense (3) 60,940 Discount on Bonds Payable (1) 10,940 Cash (2) 50,000 (To record semiannual payment of interest and amortization of discount on bonds) Table (1) Working notes: Calculate discount on bonds payable semiannually. Discount on bonds payable semiannually)=DiscountonbondspayableperyearNumberofsemiannual=$109,40110=\$10,940  (1)

Calculate the amount of cash interest

### Want to see the full answer?

Check out a sample textbook solution.See solution

### Want to see this answer and more?

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

See solution