1. Compute bond proceeds, amortizing discount by interest method, and interest expense

Boyd Co. produces and sells aviation equipment. On the first day of its fiscal year, Boyd issued $85,000,000 of four-year, 8% bonds at a market (effective) interest rate of 11%, with interest payable semiannually. This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the questions below.

Open spreadsheet

Compute the following:

a) The amount of cash proceeds from the sale of the bonds. Round your answer to the nearest dollar.

$

b) The amount of discount to be amortized for the first semiannual interest payment period, using the interest method. Round your answer to the nearest dollar.

$

c) The amount of discount to be amortized for the second semiannual interest payment period, using the interest method. Round your answer to the nearest dollar.

$

d) The amount of the bond interest expense for the first year. Round your answer to the nearest dollar.

$

2) Bond Premium, Entries for Bonds Payable Transactions

Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $56,700,000 of 10-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $64,405,899. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

For all journal entries, if an amount box does not require an entry, leave it blank.

1.Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.

Cash $

Premium on Bonds Payable $

Bonds Payable $

2.Journalize the entries to record the following:

a.The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.

Interest Expense $

Premium on Bonds Payable $

Cash $

b.The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.

Interest Expense $

Premium on Bonds Payable $

Cash $

3.Determine the total interest expense for 20Y1. Round to the nearest dollar.

$

4.Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?

5.Compute the price of $64,405,899 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount $

Present value of the semi-annual interest payments $

Price received for the bonds $

3) Bond Premium, Entries for Bonds Payable Transactions, Interest Method of Amortizing

Bond Premium Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $53,000,000 of 20-year, 14% bonds at a market (effective) interest rate of 12%, receiving cash of $60,961,660. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

For all journal entries, if an amount box does not require an entry, leave it blank.

1.Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.

20Y1 July 1

Cash $

Premium on Bonds Payable $

Bonds Payable $

2. Journalize the entries to record the following:

a.The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the interest method. Round to the nearest dollar.

20Y1 Dec. 31

Interest Expense $

Premium on Bonds Payable $

Cash $

b.The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. Round to the nearest dollar.

20Y2 June 30

Interest Expense $

Premium on Bonds Payable $

Cash $

3.Determine the total interest expense for 20Y1. Round to the nearest dollar.

4) Bond Discount, Entries for Bonds Payable Transactions,

Interest Method of Amortizing Bond Discount On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $68,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $54,404,080. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

For all journal entries, if an amount box does not require an entry, leave it blank.

1.Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.

20Y1 July 1

Cash $

Discount on Bonds Payable $

Bonds Payable $

2. Journalize the entries to record the following:

a.The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.

20Y1 Dec. 31

Interest Expense $

Discount on Bonds Payable $

Bonds Payable $

b.The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.

20Y2 June 30

Interest Expense $

Discount on Bonds Payable $

Bonds Payable $

3.Determine the total interest expense for 20Y1. Round to the nearest dollar.

$