Marvin Company issued $100,000 of 5-year, 8% bonds at 92 on July 1, 2013. Interest is payable semiannually on January 1, and July 1. The company uses straight-line amortization for premium or discount on bonds payable.
Required:
a) Prepare all necessary journal entries related to the bonds for 2013 and 2014.
b) What amount of interest expense will be shown on the 2013 and 2014 income statements?
c) What amount of interest payments will be shown on the statement of cash flows for 2013 and 2014?

Question

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The Answer of Marvin Company issued $100,000 of 5-year, 8% bonds at 92 on July 1, 2013. Interest is payable semiannually on January 1, and July 1. The company uses straight-line amortization for premium or discount on bonds payable.
Required:
a) Prepare all necessary journal entries related to the bonds for 2013 and 2014.
b) What amount of interest expense will be shown on the 2013 and 2014 income statements?
c) What amount of interest payments will be shown on the statement of cash flows for 2013 and 2014?

Marvin Company Issued $100,000 of 5-Year, 8% Bonds at 92