Billy's hamburgers issued 5%, 10-year bonds payable at 90 on December 31, 2012. At December 31, 2014, Billy Reported the bonds payable as follows:
Long-Term Liabilities
Bonds Payable $400,000
Less: Discount on Bonds Payable 32,000 $368,000
Billy Pays semiannual interest each June 30 and December 31
1. Answer the following questions about Billy's bonds payable:
a. What is the maturity value of the bonds?
b. What is the carrying amount of the bonds at December 31, 2014
c. What is the semiannual cash interest payment on the bonds?
d. How much interest expense shoudl the company record each year?
2. Record the June 30, 2014, semiannual interest payment and amortization of discount.