Account for bonds payable at a discount; amortize by the straight line method

Requirements
1. Journalize the following transactions of Laroux Communications, Inc.:
2. At December 31, 2012, after all year-end adjustments, determine the carrying amount of Laroux Communications bonds payable, net.
3. For the six months ended July 1, 2012, determine the following for Laroux Communications, Inc.:
a. Interest expense
b. Cash interest paid
What causes interest expense on the bonds to exceed cash interestpaid?

Transcribed Image Text:

2012 Jan 1 issued $4,000,000 of 6%, 10-year bonds payable at 95. Interest payment dates are July 1 and January 1. Jul1 Paidemiannual interest and amortized bonds by the straight-line method on the 6% bonds payable. Accrued semiannual interest expense and amortized bonds by the straight-line method on the 6% bonds payable. Dec 31 2013 Jan 1 Paid semiannual interest. 2022 Jan 1 Paid the 6% bonds at maturity.