Johnny’s Hamburgers issued 8%, 10-year bonds payable at 85 on December 31, 2024. At December 31, 2026, Johnny reported the bonds payable as follows:

Johnny pays semiannual interest each June 30 and December 31.

Requirements
1. Answer the following questions about Johnny’s bonds payable:
a. What is the maturity value of the bonds?
b. What is the carrying amount of the bonds at December 31, 2026?
c. What is the semiannual cash interest payment on the bonds?
d. How much interest expense should the company record each year?
2. Record the June 30, 2026, semiannual interest payment and amortization of discount.

Transcribed Image Text:

Long-term Liabilities: Bonds Payable Less: Discount on Bonds Payable $ 300,000 (36,000) $264,000