Prepare the entry to recognize the first interest payment

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Reference no: EM13940984

USING A DISCOUNT AMORTIZATION TABLE (STRAIGHT LINE)

Panamint Candy Company prepared the following amortization table for $500,000 of five-year, 9.2 percent bonds issued and sold by Panamint on December 31, 2009, for $472,000:

Period	Cash Payment (Credit)	Interest Expense (Debit)	Discount on Bonds Payable (Credit)	Discount on Bonds Payable Balance	Carrying Value
				$28,000	$472,000
6/30/10	$23,000	$25,800	$2,800	25,200	474,800
12/31/10	23,000	25,800	2,800	22,400	477,600
6/30/11	23,000	25,800	2,800	19,600	480,400
12/31/11	23,000	25,800	2,800	16,800	483,200
6/30/12	23,000	25,800	2,800	14,000	486,000
12/31/12	23,000	25,800	2,800	11,200	488,800
6/30/13	23,000	25,800	2,800	8,400	491,600
12/31/13	23,000	25,800	2,800	5,600	494,400
6/30/14	23,000	25,800	2,800	2,800	497,200
12/31/14	23,000	25,800	2,800	0	500,000

Required:

1. Prepare the entry to recognize the sale of the bonds on December 31, 2009.

2. Prepare the entry to recognize the first interest payment on June 30, 2010.

3. Determine the interest expense for these bonds that Panamint will report on its 2012 income statement.

4. Indicate how these bonds will appear in Panamint's December 31, 2013, balance sheet.

Reference no: EM13940984

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