On january 1, 2018, robert unlimited issues 15%, 15-year bonds payable with a face value of $ 230 comma 000. the bonds are issued at 106 and pay interest on june 30 and december 31. (assume bonds payable are amortized using the straight-line amortization method.)

(A) issuance of the bonds

cash                            243,000 debit

  bonds payable                         230,000 credit

  premium on bonds payable       13,800 credit

(B) first interest payment

premium on bond payable   460 debit

interest expense               16,790 debit

                          cash                               17,250 credit

Explanation:

(A)

cash proceeds face value x point issued/100

                230,000 x 106/100 = 243,800

       face value                           230,000

  premium on bond payable     13,800

(B)

first interest payment

cash proceeds:

face value x bond rate /2 (because, there are 2 payment per year)

230,000 x 15% / 2 = 17,250

amortization on the bonds

premium/ total payment

15 years x 2 payment per year = 30 payment

13,800/30 = 460 amortizatioonper payment

interest expense

cash proceeds - amortization

17,250 - 460 = 16,790‬

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