Johnny’s Hamburgers issued 8%, 10-year bonds payable at 85 on December 31, 2018. At December 31, 2020, Johnny reported the bonds payable amortized on the straightline basis as follows:

Johnny pays semi-annual interest each June 30 and December 31.

Required

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, 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 $300,000 Less: Discount on Bonds Payable 36,000 $264,000