$500,000 of bonds of Tom Turkey Co. were sold on December 1, 20A at $518,375 plus accrued interest. The bonds pay 6% interest annually. Interest payments are made on February 28 and August 31. The bonds were dated September 1, 20A and have a 9 year life. Tom Turkey has a fiscal year end of August 31.

Required:

1.What is the amount of interest that will be paid to the bondholders on a monthly basis?

2.What is the amount of accrued interest the bondholders will be Required to pay when they purchase the bonds on December 1, 20A?

3.What is the amount of discount or premium?

4.Over what period of time should the discount or premium be amortized?

5.What would be the amortization amount per month assuming straight-line amortization?

6.Give the journal entry to record the sale of the bonds on December 1, 20A

7.Give the journal entry to record the semiannual interest payment on February 28, 19B, including the amortization of any premium or discount.

8.Give the journal entry to record the semiannual interest payment on August 31, 19B, including the amortization of any premium or discount.

9. Show how the bonds would be reported on the classified balance sheet at the fiscal year end August 31, 19B.