Answer:
I will start with question 2)
January 1, 2021, bonds issued at a premium
Dr Cash 852,031
Cr Bonds payable 800,000
Cr Premium on bonds payable 52,031
June 30, 2021, first coupon payment
Dr Interest expense 37,398.45
Dr Premium on bonds payable 2,601.55
Cr Cash 40,000
December 31, 2021, first coupon payment
Dr Interest expense 37,398.45
Dr Premium on bonds payable 2,601.55
Cr Cash 40,000
2)
Date Cash Interest Change in Carrying Value
paid expense carrying value
01/01 - - 52,031 852,031
06/30 40,000 37,398.45 49,429.45 849,429.45
12/21 40,000 37,398.45 46,827.90 846,827.90
