Swan Diver Inc. issued $ 400,000 of 20-year, 5% bonds payable on July 1, 2021 providing an effective-interest rate of 4.75%, for proceeds of $ 412,820. Interest is payable semi-annually on December 31 and June 30. Swan Diver's year end is June 30 and the effective-interest method is used in accounting for bonds payable.
Instructions
a) Record the issuing of the bonds on July 1, 2021.
b) Prepare an amortization table for the first year (two payments).
c) Record the payments on December 31, 2021 and June 30, 2022.
d) Show how the bond payable would be presented on Swan Diver's June 30, 2022 balance sheet.

Question

Quizplus · Accepted Answer

The Answer of Swan Diver Inc. issued $ 400,000 of 20-year, 5% bonds payable on July 1, 2021 providing an effective-interest rate of 4.75%, for proceeds of $ 412,820. Interest is payable semi-annually on December 31 and June 30. Swan Diver's year end is June 30 and the effective-interest method is used in accounting for bonds payable.
Instructions
a) Record the issuing of the bonds on July 1, 2021.
b) Prepare an amortization table for the first year (two payments).
c) Record the payments on December 31, 2021 and June 30, 2022.
d) Show how the bond payable would be presented on Swan Diver's June 30, 2022 balance sheet.