P9-83B. (Learning Objective 2: Accounting for bonds payable at a premium; amortizing by the effective interest method)

Requirements 1. Journalize the following transactions of Seville Communications, Inc.:

2. At December 31, 20X0, after all year-end adjustments, determine the carrying amount of Seville Communications bonds payable, net.
3. For the six months ended July 1, 20X0, determine the following for Seville Communications, Inc:

a. Interest expense

b. Cash interest paid What causes the interest paid for the bonds to be higher than the interest expense?

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20X0 Jan 1 Jul 1 Dec 31 20X1 Jan 1 2020 Jan 1 Issued $2,000,000 of 7%, 10-year bonds payable when the market rate is 6%. Paid semi-annual interest and amortized the bonds by the effective interest method on the 7% bonds payable. Accrued semi-annual interest expense and amortized the bonds by the effective interest method on the 7% bonds payable. Paid semi-annual interest. Paid the 7% bonds at maturity.