E9- 4 2B (L earn i ng Obj ec tiv e 2: I ss u e b onds p aya b le ( d i sco u n t) , and record i n t

E9-42B (Learning Objective 2: Issue bonds payable (discount), and record interest payments and the related bond amortization using the effective-interest method) Winner Sports Ltd. is authorized to issue $4,000,000 of 12%, 10-year bonds payable. On December 31, 2012, when the market interest rate is 14%, the company issues $3,200,000 of the bonds and receives cash of $2,861,000. Winner Sports amortizes bond discount by the effective-interest method. The semiannual interest dates are June 30 and December 31.

▶ Requirements

1. Prepare a bond amortization table for the first four semiannual interest periods.

2. Record issuance of the bonds payable on December 31, 2012; the first semiannual interest payment on June 30, 2013; and the second payment on December 31, 2013.

 

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