Bight Corporation issued $400,000 of 5-year bonds on April 1, 2023. Interest is paid semi-annually on April 1 and October 1. Below is a partial amortization schedule for the first few years of the bond issue. 

Instructions 

a. Were the bonds issued at a discount or at a premium? 

b. What is the bonds’ face value? 

c. What will the bonds’ carrying amount be at the maturity date? 

d. What will be the total interest payments over the five-year life of the bonds? Total interest expense? 

e. Prepare the journal entry to record the issuance of the bond. 

f. Prepare the journal entry for the first three interest payments. 

g. Prepare the adjusting journal entry on December 31, 2023, assuming this is Bight’s year end. 

h. Prepare the journal entry for the payment of interest on April 1, 2024. Assume no reversing entries have been used.

Transcribed Image Text:

Semi-Annual Interest Interest Period Apr. 1, 2023 Oct. 1, 2023 Apr. 1, 2024 Oct. 1, 2024 Apr. 1, 2025 Oct. 1, 2025 Apr. 1, 2026 Payment Interest Expense $8,000 8,000 8,000 8,000 8,000 8,000 $6,277 6,251 6,225 6,198 6,171 6,143 Amortization $1,723 1,749 1,775 1,802 1,829 1,857 Carrying Amount of Bonds $418,444 416,721 414,972 413,197 411,395 409,566 407,709