On December 31, 2019, Vader Corporation issued $450,000, 10%, 15-year bonds, receiving $388,058 cash when the market rate of interest was 12%. The bonds pay interest semi-annually each June 30 and December 31. Vader uses the effective interest method of amortization to amortize and premium or discount. 450,000 A SET-UP OF BASIC BOND INFORMATION: Face Value Stated Rate of Interest Annual Stated Interest Periodic Stated Interest Bond Price (given) Discount on Bond $ 10% $ $ $ 45,000 22.500 388,058 B. Journal Entry DR CR On the date of issue, December 31, 2019: Carrying Value of Bond C AMORTIZATION OF BOND DISCOUNT: Effective Interest Amortization Table Periodic Stated Effective Date Interest Interest Amortization Issue Date 6/30/20 12/31/20 6/30/21 12/31/21 6 7 D. Journal Entry() 8 3 0 5 DR CR o On the interest payment date, June 30, 2020: 1 2 13 54 95 16 47 18 following ustions: D. Journal Entre) DR CR On the Interest payment date June 30, 2020: 8 19 50 E. Answer the following questions: 51 1. What amount of interest expense will be reported by Vader on the 2020 income statement? 52 2. What amount of intrerest expense will be reported by Vader on the 2021 income statement? 53 3. What is the total interest expense over the life of the bond? 54 55 F. Show the balance sheet presentation of the bond liability on December 31, 2021: 56 57 58 59 60 61 62 63 On December 31, 2019, Darth Corporation issued $380,000, 12%, 20-year bonds, receiving 5445,206 cash when the market rate of interest was 10%. The bond pay interest semi-annually each June 30 and December 31. Darth uses the effective interest method of mortization to amortize and premium or discount A SET-UP OF BASIC BOND INFORMATION: Face Value Stated Rate of Interest Annual State Interest Periodic Stated Interest Bond Price (given) Premium on Bond B. Journal Entry DR CR On the date of issue, December 31, 2019: 22 Carrying Value of Bond Date 25 c. 25 AMORTIZATION OF BOND PREMIUM: 27 Effecthe Interest Amortization Table 28 Periodic 29 Stated Effective 30 Interest Interest Amortization 31 Issue Date 32 6/30/20 33 12/31/20 6/30/21 35 12/31/21 36 37 D. Jounral Entry) DR CR 39 40 On the Interest payment date, June 30, 2020: 42 44 45 46 47 48 49 50 E. Answer the following questions: OSUZ 12/31/21 D. Jounral Entry() DR CR On the interest payment date, June 30, 2020: 12 43 45 46 48 49 SO E. Answer the following questions: 51 1. What amount of interest expense will be reported by Darth on the 2020 income statement? 52 2. What amount of intrerest expense will be reported by Darth on the 2021 income statement? 53 3. What is the total interest expense over the life of the bond? 54 55 F. Show the balance sheet presentation of the bond liability on December 31, 2021: 56 57 58 59 60 61 62
