1. Journalize the following transactions of Lyons Communications, Inc.:

2. At December 31, 2018, after all year-end adjustments have been made, determine the carrying amount of Lyons’ bonds payable, net.

3. For the six months ended July 1, 2018, determine the following for Lyons:

a. Interest expense

b. Cash interest paid

What causes interest expense on the bonds to exceed cash interest paid?

Transcribed Image Text:

2018 Issued $3,000,000 of 6%, 10-year bonds payable at 95. Interest payment dates are July 1 and January 1. Jan 1 Jul 1 Paid semiannual interest and amortized the bond discount by the straight-line method on the 6% bonds payable. Dec 31 Accrued semiannual interest expense and amortized the bond discount by the straight-line method on the 6% bonds payable. 2019 Jan 1 Paid semiannual interest. 2028 Jan 1 Paid the 6% bonds at maturity.