Straight-line amortization of bond discount

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Straight-line amortization of a bond discount

Farm Supplies, Inc., issued $250,000 of 10-year, 6 percent bonds on July 1, 2011, at 95. Interest is payable in cash semiannually on June 30 and December 31.

1. Prepare the journal entries to record issuing the bonds and any necessary journal entries for 2011 and 2012. Post the journal entries to T-accounts.

2. Prepare the liabilities section of the balance sheet at the end of 2011 and 2012.

3. What amount of interest expense will Farm Supplies report on the financial statements for 2011 and 2012?

4. What amount of cash will Farm Supplies pay for interest in 2011 and 2012?

Reference no: EM133273007

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