Mack Corporation produces and sells sporting equipment. To finance development of a wakeboard line, Mack Corporation issued

Question:

Mack Corporation produces and sells sporting equipment. To finance development of a wakeboard line, Mack Corporation issued $5,000,000 of 10-year, 7% bonds on June 1, 2015. The bonds pay interest on June 1 and were issued at an effective interest rate of 6.5%, resulting in Mack Corporation receiving cash of $5,179,720.76. The bond premium is amortized using the effective interest method of amortization.

a. Journalize the entries to record the following:

1. Sale of the bonds on June 1, 2015.

2. Adjusting entry for interest expense at the December 31 year-end.

3. First annual interest payment and premium amortization.

b. Show the reporting of the liabilities related to the bonds on the balance sheet at December 31, 2015, rounding amounts to the nearest whole dollar.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...