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Exercise 9-51 (Algorithmic) Interest Payments and Interest Expense for Bonds (Straight Line) Klamath Manufacturing sold 20-year bonds with a total face amount of $365,000 and a stated rate of 7.5 percent. The bonds sold for $399,000 on December 31, 2011, and pay interest semiannually on June 30 and December 31 1. Prepare the entry to recognize the sale of the bonds. If an amount box does not require an entry, leave it blank. 2011 Dec. 31 Record issuance of bonds at premium 2. Determine the amount of the semiannus interest payment required by the bonds. Found your answer to the nearest whole dollar required 3. Prepare the journal entry made by Kamath at June 30, 2012, to recognize the interest expense and an interest payment. Round your answer to the nearest whole dollar, if required. If an amount box does not require an entry, leave it bank 2012 June 30 Record interest expense 4. Determine the amunt of interest expense for 2012 5. Concentual Connection: If Klamath issued bonds with a variable interest rate would you expect the rate to increas, dec o r stay the same The put in the box below wilt begraded but may be add ed your Completing a Debt Amortization Table (Straight Line) Cagney Company sold $244,000 of bonds on December 31, 2011. A portion of the amortization table appears below. Period Cash Payment (Credit) Interest Expense (Debit) Carrying Value Discount on Bonds Payable (Credit) Discount on Bonds Payable Balance At issue $8,000 $236,000 $800 $236,800 6/30/12 12/31/12 6/30/13 $12,000 12,000 $12,800 12,800 7,200 6,400 800 237,600 1. Determine the stated interest rate on these bonds. Round your answer to the nearest whole. 2. Calculate the interest expense and the discount amortization for the interest period ending June 30, 2013 Interest expense Discount amortization 3. Calculate the ability balance shown on a balance sheet after the interest payment is recorded on June 30, 2013 Using a Discount Amortization Table (Straight Line) Panamint Candy Company prepared the following amortization table for $500,000 of five year, 9.2 percent bonds issued and sold by Panamint on December 31, 2012, for $143,000: Cash Interest Discount Discount Carrying Period Payment Expense on londs on Bonds Value (Credit) (Debit) Payable Payable (Credit) Balance 57,000 443,000 6/30/13 12/31/13 6/30/14 12/31/14 6/30/15 12/31/15 6/30/16 12/31/16 6/30/17 12/01/17 448,700 454,400 460,100 465,800 471,500 $23,000 $28.700 23,000 28.700 23,000 28.700 23,000 28.700 23,000 25,700 23.000 28,700 23,000 28,700 23.000 28,700 23,000 25,700 23.000 28.700 $5,700 5,700 5,700 5,700 5,700 5,700 5.700 5,700 5.700 5,700 51,300 45,600 39,900 34,200 25,500 22.800 17,100 11.400 5.700 477,200 452.900 489,500 404300 S00,000 Prepare the entry to recognize the sale of the bonds on December 31, 2012. If an amount box does not require an entry, leave it blank. 2012 Dec. 31 Journal Account and Explanation Debit Credit Record issuance of bonds at discount 2. Prepare the entry to recognize the first interest payment on June 30, 2013. If an amount box does not require an entry leave it bank 2013 June 30 2. Prepare the entry to recognize the first interest payment on June 30, 2013. If an amount box does not require an entry, leave it blank 2013 June 30 Record interest expense 3. Determine the interest expense for these bonds that Panamint will report on its 2015 income statement. 4. Indicate how these bonds will appear in Panamint's December 31, 2016, balance sheet. Panamint Candy Company Balance Sheet (partial) 4. Indicate how these bonds will appear in Panamint's December 31, 2016, balance sheet. Panamint Candy Company Balance Sheet (partial) For the Year Ended December 31, 2016 Bonds payable
