Account for bonds payable at a discount; amortize by the straight-line method

Requirements
1. Journalize the following transactions of Lamothe Communications, Inc.:

2. At December 31, 2012, after all year-end adjustments, determine the carrying amount of Lamothe Communications bonds payable, net.
3. For the six months ended July 1, 2012, determine the following for Lamothe Communications Inc:
a. Interest expense
b. Cash interest paid
What causes interest expense on the bonds to exceed cash interestpaid?

Transcribed Image Text:

2012 Jan 1 issued $3,000,000 of 8%, 10-year bonds payable at 94. Jul Paid semiannual interest and amortized the bonds by the Dec 31 Accrued semiannual interest expense and amortized the 2013 Interest payment dates are July 1 and January 1. straight-line method on the 8% bonds payable. bonds by the straight-line method on the 890 bonds payable. Jan 1 Paid semiannual interest. 2022 Jan 1 Paid the 8% bonds at maturity.