Question

orbit company issued a $70,000, 11%, 10-year bond payable at 92 on january 1, 2025. interest is paid semiannually on january 1 and july 1. read the requirements. requirement 1. journalize the issuance of the bond payable on january 1, 2025. (record debits first, then credits. select explanations on the last line of the journal entry.) date jan. 1, 2025 accounts and explanation cash discount on bonds payable bonds payable issued bonds at a discount. debit 64,400 5,600 credit 70,000 requirement 2. journalize the payment of semiannual interest and amortization of the bond discount or premium on july 1, 2025. (assume bonds payable are amortized using the straight-line amortization method. record debits first, then credits. select explanations on the last line of the journal entry. round your answers to the nearest whole dollar.) date jul. 1, 2025 accounts and explanation interest expense discount on bonds payable cash paid semiannual interest and amortized discount. debit credit 3,850

Explanation:

Step1: Calculate the semi - annual amortization of the bond discount

The bond discount is \(70,000 - 64,400=5,600\). The bond has a 10 - year life, so the number of semi - annual periods \(n = 10\times2=20\).
The semi - annual amortization of the bond discount is \(\frac{5,600}{20}=280\).

Step2: Calculate the semi - annual interest expense

The semi - annual cash interest payment is \(70,000\times\frac{11\%}{2}=3,850\).
The semi - annual interest expense is the sum of the cash interest payment and the amortization of the bond discount. So, Interest Expense \(=3,850 + 280=4,130\).

Answer:

Date	Accounts and Explanation	Debit	Credit
	Discount on Bonds Payable		\(280\)
	Cash		\(3,850\)
	Paid semiannual interest and amortized discount.