E10-8 (Algo) Recording and Reporting a Bond Issued at a Discount (with Discount Account) LO10-4

Denzel Corporation is planning to issue bonds with a face value of $690,000 and a coupon rate of 7.5 percent. The bonds mature in 4 years and pay interest semiannually every June 30 and December 31. All of the bonds were sold on January 1 of this year. Denzel uses the effective-interest amortization method and also uses a discount account. Assume an annual market rate of interest of 8.5 percent. (FV of $1, PV of $1, FVA of $1, and PVA of $1)

Note: Use appropriate factor(s) from the tables provided.

Required:

1. and 2. Prepare the journal entries to record the issuance of the bonds and interest payment on June 30 of this year.

3. What bonds payable amount will Denzel report on its June 30 balance sheet?

Journal entry worksheet

• Record the issuance of bonds.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
January 01

Journal entry worksheet

• Record the interest payment on June 30 using effective-interest amortization.

Note: Enter debits before credits.

Date	General Journal	Debit	Credit
June 30

What bonds payable amount will Denzel report on its June 30 balance sheet? (Enter all amounts as positive values. Round your intermediate calculations and final answers to whole dollars.)

DENZEL CORPORATION
Balance Sheet (Partial)
At June 30
Long-term liabilities