1. Aloha Cruise issued $170,000 in 6%, 10-year bonds (payable on December 31, 2028) on December 31, 2018, for $156,776. Interest is paid on June 30 and December 31. The market rate of interest is 8%.

Required:

Prepare journal entries for the payment of interest on June 30 and December 31, 2018.

Answer:

Why are we multiplying by these numbers? (eg. =156776*4%) and and how do we know the discount on bonds payable?

June-30- 19 Interest expense 6271.04=1567764% Discount on bonds payable Cash 5100=1700003% \begin{tabular}{ccc} \hline Dec-31-19 Interest expense & 6317.88 & =(156776+1171.04)4% \\ \hline Discount on bonds & 1217.88 & \\ payable & 5100 \\ Cash & \end{tabular}