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Suppose Southern Airlines issued $90,000 of 7%, five-year bonds when the market interest rate is 10%. The market price of the bonds drops, and Southwest

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Suppose Southern Airlines issued $90,000 of 7%, five-year bonds when the market interest rate is 10%. The market price of the bonds drops, and Southwest receives $79,584 when the bonds are issued. The transaction was recorded as follows: (Click the icon to view the transaction.) Southern's journal entries to record interest expense and amortize the bond discount in the first year follows: (Click the icon to view the journal entries.) At December 31, 2021, Southern's bond accounts appear as follows: (Click the icon to view the accounts.) What would Southern Airlines' 2021 income statement and year-end balance sheet report for these bonds? Begin by completing the income statement for 2021. Income Statement for 2021 Transaction Journal Entry Date Accounts and Explanation Debit Credit 2021 Cash 79,584 Jan 1 10,416 Discount on Bonds Payable Bonds Payable 90,000 To issue bonds at a discount. Print Done Journal entries Journal Entry Accounts and Explanation Date Debit Credit 2021 Interest Expense 3,979 Jul 1 Discount on Bonds Payable 829 Cash 3,150 4,021 To pay semiannual interest and amortize bond discount. Dec 31 Interest Expense Discount on Bonds Payable Interest Payable To accrue semiannual interest and amortize bond discount. 871 3,150 Print Done Accounts Bonds Payable Discount on Bonds Payable 90,000 10,416 829 871 Bal 8,716 Bond carrying amount, $81,284 = $90,000 - $8,716. Print Done

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