Analyzing and Reporting Financial Statement Effects of Bond Transactions On January 1, 2016, Trueman Corp. issued $300,000 of 20-year, 11% bonds for $277,431, yielding a market (yield) rate of 12%. Interest is payable semiannually on June 30 and December 31. Required a. Confirm the bond issue price. b. Prepare journal entries to record the bond issuance, semiannual interest payment and discount amortization on June 30, 2016, and semiannual interest payment and discount amortization on December 31, 2016. Use the effective interest rate method. c. Post the journal entries from part b to their respective T-accounts. d. Trueman elected to report these bonds in its financial statements at fair value. On December 31, 2016, these bonds were listed in the bond market at a price of 101 (or 101% of par value). What entry is required to adjust the reported value of these bonds to fair value? e. Prepare a table summarizing the effect of these bonds on earnings for 2016 Confirm Bond Price Journal entries T-accounts Fair Value En Confirm Bond Price Journal entries Note: Round your answers to the nearest dollar. Present value of principal repayment 5 29.167 Present value of interest payments S 248.264 Selling price of bands 5 277,431 Confirm Bond Price Journal entries T-accounts Fair Value Entry/Earnings Table Debit 228,941 x Date Description 12/31/2016 Unrealized loss Fair value adjustment T-accounts Fai Coupon payments S 33.000 Discount amortization 301 Total interest expense Fair value adjustment 33.301 228,941 x Credit Total effect on income (deduction) $ (195.640) x Note: Round your answers to the nearest dollar. General Journal Date Description Debit 01/01/16 Cash 277.431 Bond discount Bonds payable 225.690 x 0 300,000 6/30/16 Interest expense 16,646 1 Bond discount 0 0 146 Cash 0 16.500- 11 12/31/16 Interest expense Bond discount 16.655 0 11 O Cash 155 16.500 Credit 228.941 x Confirm Bond Price Journal entries T-accounts Fair Value Entry/Earnings Table Cash (A) Bonds Payable (L) Interest Expense (E) Bond Discount (XL) 01/01/16 06/30/16 12/31/16 277,431 01/01/16 0 300,000 01/01/16 01/01/16 225,640 x 0 16,500 16.500 06/30/16 16 0 06/30/16 16.646 0 06/30/16 16 146 12/31/16 12/31/16 16.655 0 12/31/16 155