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So half a year we could have just divided it by 2 as well. I'm going to do that in this calculation. I'm going to do the same calculation here. I'm going to put a negative so that we have a negative number in here. We're going to put 240,000 times 0.06 and this time I'm just going to divide it by 2 instead of doing the ratio of 612, 1 half divided by 2 and we should come up with that same 7,200. Now the next thing that we need to do as we post this is decrease the discount. Remember we were going to decrease that on a straight line method over the life of the loan. So let's do a little worksheet over here and see what that might look like. So if we have the loan went on the books at 1,1 I'm just going to start that off in our worksheet over here and I'm going to put the carrying amount of the loan, the unamortized discount which is the, I'll just say equals this number here. That's the unamortized discount amount that we have on the loan. The carrying amount then of the loan equals the face amount and remember we put that on the for 240,000 minus the unamortized discount. So this is the face amount of the loan minus the unamortized discount carrying amount of 198,484. That's this minus this 198,484. Now we'll calculate the interest as of 630. Now sometimes it's going to be easier to actually use a calculator in some ways because we'll have sub calculations when we do that. Let me show you what I mean on this. If we pull out the calculator we're going to say that if we calculate the interest on this we've got the discount of 41516 divided by, I'm going to divide it by the number of years. We said that we're going to have this for 15 years. So divided by 15, that means that we're going to have it's not an even number of course but the 2767 per year. However, we pay the interest semi annually or twice a year. So we could take that number and then divide it by 2 and that would give us the 1383. You can also think about it this way. We could take the total amount 41516 and divide it by 15 years. But then we pay twice a year. So if we double that divided by 30 years divided by 30 and that should give us the same amount here. So I'm going to do that same calculation in this cell in M4. Let's take this amount here, the discount amount 41516. I'm going to divide by the number of years 15. Then I'm going to divide that again by 2 because we have semi annual payments. So there we have it here and again that's a rounded number. So if I went to the home tab, we went to the numbers group and we increased the decimals. You can see that it's not an exact number here. It doesn't even round two pennies. But I'm going to keep the number and when we use that number Excel is going to actually use the unrounded number. It's going to use the ratio and so keep that in mind. If you see things that are off by a couple dollars or some pennies, it's probably because there's some type of rounding in our formulas that are being used. Usually we're okay with that but sometimes it can cause some confusion. So now what's going to happen to our unamortized discount, it's going to go down by this amount. So we're going to say this equals the 41 minus the 1384 enter, brings it down to here. What's going to happen to our carrying amount now? The carrying amount now is going to equal the 240,000 minus this amount here, the 40,132 and enter. So at the end of the day, the carrying amount on our trial balance, which is going to be this and this, should be 199,868. It's current 198,484 after we post this transaction. So we're going to basically reduce the discount by the 1384. And that means that this has a debit balance. We need to make it go down. Therefore we're going to credit it. So I'm going to copy this account. I'm going to put it in cell C9, right click and paste it to 123. So in this discounted number, I'm going to take the negative of this number over here. I'm going to take the negative of that number and note that by doing so, instead of just typing in a negative 13484, I've taken a number that is not rounded. If I go here, if I go to the home tab, I go to the number group, I can see it's really 1389. So just keep that in mind that there could be rounding issues as we go through this. So here's the credits that are going to happen. Now we're going to need a debit for that amount. What's going to be the debit? It's going to be bond interest expense. So we're going to record the interest expense. Now it makes sense for us to record the interest expense, of course, for the amount of we're paying for interest. However, it may be a little bit more confusing to see that we are also recording interest expense for amounts we're not paying at this time because what we're doing is amortizing the discount over this time period. Also note that the amount of the bond payable, the principal amount, is not going down at all because we're not paying off any of the principal. We will not pay that off until the end of the bond at 15 years. All right, so the interest expense, this is an expense. All expenses have debit balances. They generally only go up. Therefore, we're going to debit the interest expense. So I'm going to copy that. I'm going to put that on top in C7, right-click, and paste 1, 2, 3. So if we highlight these, we know that the interest expense is going to have to be this 8584 on the taskbar. I'm going to do that with our sum plug formula, which is a negative SUM of. And again, you can move this if you want. You can also put your cursor on the bottom and highlight these four cells and enter. And then if we see these two numbers add up to 8584. And if we highlight all four numbers, it adds up to zero. We are in balance and can post it out. So I'm going to post this one first. So here's the bond interest expense. We're going to scroll down over here to I12, which is where the bond interest expense is here, equals and point to this 8584. When we hit Enter, it's going to go up in the debit direction, bringing that income down. So of course, we are recording the expense bringing that income down, in this case, which is revenue minus expenses. Then we're going to record the cash. Here's the cash. Here's the cash here. We're going to record it into the adjustment. There's something in here. So I'm going to double click on it, go to the end of it and plus. And then point to that 72. This is a credit. That's a debit. Those are opposite, making this go down. Then we're going to post the discount on bond payable. Here it is here. Discount over here. And we are going to post it to I7. So I'm going to double click on I7. We'll go to the end of I7 and hit plus and point to this 1384. That's a credit. This is a debit. It's going to make the discount go down. So now we know that the discount now matches our table over here. And if we highlight the credit of the bond minus the debit of the discount on the bond, that comes out to this 19868, which matches our table on this side here for the carrying amount of bond. All right. So we're going to do this one more time. So we're going to say over here on 1231, we are going to record bond interest and straight line amortization. It's going to basically be the exact same journal tree. We're just going to do this one more time and record the interest payment on the bond. So what's going to happen is cash affected? Yeah, we're going to record interest payments on the bond. Some cash will be affected. Cash has a debit balance. We're going to pay it out. Therefore, it's going to go down. And we're going to have to do the opposite thing to it as what it is to make it go down. And it's a debit. Therefore, we'll credit it. So I'm going to copy the cash. I'm going to put that on the bottom. Here's the date. I'm going to put it down here, right click and paste 123. And the cash will go down by, let's pull out the calculator one more time and calculate it out. It will be the 240 face amount. Face amount has not changed. Notice the face amount did not go down unlike a mortgage, which goes down, principal goes down each month. This one does not. Therefore, the amount of interest we pay will remain the same. So it will be the 240 times. And just remember, it's the amount on the bond, not the market rate. So times 0.06, and that'll give us the 14.4. If it was for a year, however, we're paying it for six months. So we could think about a couple of ways. We could divide by two. We could break it down and divide by 12, giving us a monthly total of 1,002 times six months half past. And that will give us the 7,002. I'm going to do that same calculation or similar calculation here. I'm going to put a negative to make it a credit. And we're going to put in the amount of 240, the face amount of the bond. We're going to multiply it that times the rates on the bond of 0.06. And this time, I'm going to just divide it by two for half a year, six months, half a year, semi-annually divided by two. And we should come out with that same 7,200. Now, remember that the other thing that's kind of funny is we're going to have to reduce the discount on the bond as we record the payments. And we're just going to do that straight line amortization. So we're going to go back over here and we'll take a look at our table on 1231. We're going to do the same thing. It's going to be the same type of calculation here, meaning that we're going to take, we can do it with a calculator again first. We're going to take the carrying amount, the 41, 516. We're going to divide that by the number of years, 15. And that would be how much per year, but we were amortizing semi-annually. So we could divide by two. And that would give us the semi-annual number, which is this number here, although of course this is rounded. Some people would like to think about it this way. If we took the 41, 516 divided by, there's 15 years, but it's semi-annual, therefore there's 30 time periods divided by 30, we would come up with that same number. So I'm going to just take the same number. I'm going to say this equals this same number here, and it's going to be using that same number to reduce the amount on the bond discount. And then this is the unannualized discount. We're going to amortize, we're going to reduce it by the amortized amount. So we're going to say this equals the 41, 132 from last time minus the next 1384, means it's going to go down to 38, 748. That's what this number will be after we post this transaction. Therefore the carrying amount will then be the amount on the face value of the bond, 240,000 minus the unannualized discount, 38, 748. We'll bring this down to 201, 252. So that means that we're going to have to reduce the discount on the bond by this 1384. This is a debit, we need to make it go down. So we're going to do the opposite thing to it, which in this case is a credit. So I'm going to copy that, I'm going to right click copy the discount on the bond, I'm going to put it on the bottom in cell C13, right click and paste 123. And we're going to put the amount there. I'm just going to do it this way. I'm going to say negative of this number and enter. And note what that does is it puts a number that is rounded. So if I go here and I go to the numbers group and I increase decimals, it's really this number. So just keep that in mind if you hard-code it in there, it's going to be a little bit different by pennies. So then we are going to post the other side of it. And why are we paying the cash? Because we're paying off the rent kind of on the use of the money called interest expense. And so we're going to go to the bond interest expense. It is an expense, expenses have debit balances. We need to make it go up. Therefore we're going to do the same thing to it, which in this case would be another debit. So I'm going to copy the expense on the bond. We're going to put this over here in C14, right-click and paste 123. And how much is going to go there? It's going to be the amount we paid plus the amount of the discount that we're amortizing. That's 8584. And I'm going to do that with our plug formula. So I'm going to put negative SUM of. I'm going to move this out of the way. Or you could go from the bottom up. And that'll give us our number there. If we highlight the four cells, it adds up to zero, meaning we are in balance. And we can post this out. Note that the journal entry is exactly the same. Under a straight line amortization method, it'll be the same because the carrying amount does not go down unlike a home mortgage. That's why the interest changes on a home mortgage because we're paying off part of the principal. We're not paying off part of the principal here. And we are amortizing the discount evenly. Therefore basically all the interest journal entries will pretty much be the same in this type of format. So we're going to post the bond interest expense. So here's the bond interest expense. Here it is, there's something in it. We're going to double click on it, go to the end of it and plus point to the 8584. That's a debit. This is a debit. It's going to make the debits go up, put us out of balance, bring net income down. So the expense is going up, bringing that income down. Then we're going to post the cash. Here's the cash here. Here's the cash here. Here's where we're going to post it. Double click on the cash, go to the end of it and plus and then point to that 72 that will bring the cash down. That's what we're paying out. And then we're going to post the decrease in the discount on the bond. Here it is here. Here it is here. There's something in it. So we're going to double click on I7, go to the end of it and plus. This is a credit. It was a debit. We're going to make it go down. And it goes down to that 38748 matching our table here. If we take a look at the bond payable, it's still on the books at the face amounts, not going down. The carrying amount is not going down, but the discount is therefore, if we highlight both of them, the debit, I mean the credit minus the debit means we have a carrying amount of 201252, which matches our table here. Now if we do this of course over the 15 years, over the 30 time periods, then this will go down to zero. The carrying amount will then just be the amount of the bond at 240. After 15 years, we will then have to pay that to 240, reducing the bond paying off basically the loan, the bond that we have out.