Bond Discount, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Discount On July 1, Year 1, Danzer Industries Inc. issued $37,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $29,602,220. Interest on the bonds December 31 and June 30. The fiscal year of the company the calendar year. payable semiannually on 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. Year 1 July 1 Cash 29,602,220 Discount on Bonds Payable 7,397,780 Bonds Payable 37,000,000 Feedback Check My Work Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) Year 1 Dec. 31 Interest Expense 2,072,155 Discount on Bonds Payable 111 2,1X35,000 Cash 37,155 b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.) Year 2 June 30 Interest Expense 2,074,756 Discount on Bonds Payable 2,035,000 X Cash 39,756 x Feedback Check My Work 2b. Cash received (- premium amortized Dec. 31, Year 1) x semiannual market rate = Interest Expense (debit). Principal x semiannual contract rate = cash paid (credit). The premium amortized (debit) is the difference between the two amounts. 3. Determine the total interest expense for Year 1. $ 2,072, 155 Feedback Check Work 3. Year 1 Interest expense is the amount debited in 2(a)