In June 2020, Front Row Entertainment had the opportunity to expand its venue operations by purchasing five different venues. To finance this purchase, Front Row issued $1,500,000 of 6%, 5-year bonds on July 1, 2020. The bonds were issued for $1,378,300 and pay interest semiannually on June 30 and December 31.
Required:
1. Prepare the journal entry to record the bond issue at July 1, 2020.
2. Assume that Front Row uses the straight-line method of amortization.
a. Prepare an amortization table through December 31, 2021.
b. Prepare the journal entry required at December 31, 2020.
c. How will the bonds be shown on the December 31, 2020 balance sheet?
3. Assume that Front Row uses the effective interest method of amortization and the annual market rate of interest was 8%.
a. Prepare an amortization table through December 31, 2021.
b. Prepare the journal entry required at December 31, 2020.
c. How will the bonds be shown on the December 31, 2020 balance sheet?