Captain Johnny Whizbang Hamburgers, Inc., issued 4%, 10-year bonds payable at 85 on December 31, 2010. At December 31, 2012, Captain Johnny reported the bonds payable as follows:

Captain Johnny uses the straight-lme amortization method and pays semiannual interest each June 30 and December 31.
Requirements 

1. Answer the following questions about Captain Johnny Whizbang’s bonds payable:

a. What is the maturity value of the bonds?

b. What is the carrying amount of the bonds at December 31, 2012?

c. What is the annual cash interest payment on the bonds?

d. How much interest expense should the company record each year?
2. Record the June 30, 2013, semiannual interest payment and amortization of discount.
3. What will be the carrying amount of the bonds at December 31, 2013?

Transcribed Image Text:

Long-Term Debt: Bonds payable ... S 300,000 Less: Discount (36,000) $264,000