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E7-26A (Learning Objective 2: Issuing bonds payable (discount); recording inter...

Oct 21, 2024

To tackle the problem regarding Goal Sports Ltd's bond issuance and amortization, let's break it down step by step. 1. Bond Amortization Table First, we need to calculate the bond discount and the effective interest for the amortization table. Bond Details: - Face Value of Bonds:

3,000,000 - Coupon Rate: 10% - Market Rate: 12% - Issued Amount:

2,400,000 - Term: 10 years (20 semi-annual periods) Semi-Annual Interest Payment: - Coupon Payment = Face Value × Coupon Rate / 2 - Coupon Payment =

3,000,000 × 10% / 2 =

150,000 Bond Discount: - Discount = Face Value - Issued Amount =

3,000,000 -

2,400,000 = $600,000 Effective Interest Rate: - Effective Interest Payment = Issued Amount × Market Rate / 2 - Effective Interest Payment =

2,400,000 × 12% / 2 =

144,000 Amortization Table for the First Four Semi-Annual Periods | Period | Cash Payment | Effective Interest | Amortization of Discount | Carrying Amount | |--------|--------------|--------------------|--------------------------|------------------| | 1 |

150,000 |

144,000 |

6,000 |

2,406,000 | | 2 |

150,000 |

144,720 |

5,280 |

2,411,280 | | 3 |

150,000 |

145,068 |

4,932 |

2,416,212 | | 4 |

150,000 |

145,362 |

4,638 |

2,420,850 | 2. Journal Entries a. Issuance of Bonds Payable on December 31, 20X0:

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b. First Semi-Annual Interest Payment on June 30, 20X1:

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c. Second Semi-Annual Interest Payment on December 31, 20X1:

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This should cover the requirements for your assignment. If you have any further questions or need clarification on any part, feel free to ask!