Bond Street Ltd

Bond Street Ltd
Accounting question. Please respond as soon as possible?

1. Sezamee Street, LLC $ 510,000 in bonds issued on January 1, 2007. The interest payments are made twice a year to 30 June and 31 December each year. The rate of interest on the bonds was 6% while the rate market interest was 7%. The term of the bonds was 5 years. If bonds were sold to 97, which is the interest expense that would record Sezamee June 30, 2007 assuming you use the straight-line method of amortization of bond premiums and discounts? 2. Elmo's World, Ltd $ 730,000 in bonds issued January 1 2009. Interest payments are made annually by December 31 each year. The rate of interest on the bonds was 8% while the market rate of interest was 6%. The term of the bonds was 10 years. If bonds were sold to 110, what is the cost of the interest that Elmo would record December 31, 2010 (2nd years) assuming that the method of effective interest rate of amortization of bond premiums and discounts?

Qn 1 When the bonds were issued, Dr. Cash $ 494,700 (0.97 x $ 510,000) Dr Bonds discount $ 15,300 (amortized over 10 periods) Bonds Payable $ 510,000 Cr (provided the value nominal) On June 30, Dr. Bond interest expense of $ 16,830 (this is the answer) Cr Discount Coupons Cr Cash $ 1,530 $ 15,300 ($ 510,000 x 6% x 6 / 12) 2 Qn When bonds are issued, the doctor in cash $ 803,000 ($ 730,000 x 110%) Bond premium Cr Cr $ 73,000 $ 730,000 Bonds payable on December 31, 2009 (First year), Dr. Bond interest expense $ 48,180 * Dr. premium over cash bonuses Cr $ 10,220 $ 58,400 ($ 730,000 x 8%) * x book value market rate, as $ 803,000 x 6% December 31, 2010 (second year), Dr. Bond interest expense $ 47566.80 ^ (this is the answer) Dr. premium bonus cash of $ 10833.20 $ 58,400 Cr ^ x book value market rate, so $ 792,780 x 6%