Danny’s Hamburgers issued 6 percent, 10-year bonds payable at 90 on December 31, 2018. At December 31, 2020, Danny reported the bonds payable amortized on the straight-line basis as follows:

Danny’s pays semi-annual interest each June 30 and December 31.

Required

1. Answer the following questions about Danny’s bonds payable:

a. What is the maturity value of the bonds?

b. What is the carrying amount of the bonds at December 31, 2020?

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

d. How much interest expense should the company record each year?

2. Record the June 30, 2020, semi-annual interest payment and amortization of discount.

Transcribed Image Text:

Long-term liabilities Bonds payable $ 600,000 Less: Discount on bonds payable 48,000 $ 552,000