Bond Discount, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Discount

On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $20,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $16,001,200. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

Required:

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. If an amount box does not require an entry, leave it blank.

Year 1, July 1	Accounts PayableBonds PayableCashInterest ExpensePremium on Bonds Payable	- Select -	- Select -
	Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable	- Select -	- Select -
	Bonds PayableCashDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable	- Select -	- Select -

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. If an amount box does not require an entry, leave it blank. Round to the nearest dollar.

Year 1, Dec. 31	Bonds PayableCashDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable	- Select -	- Select -
	Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable	- Select -	- Select -
	Acounts PayableBonds PayableCashInterest ExpensePremium on Bonds Payable	- Select -	- Select -

b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. If an amount box does not require an entry, leave it blank. Round to the nearest dollar.

Year 2, June 30	Bonds PayableCashDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable	- Select -	- Select -
	Accounts PayableBonds PayableDiscount on Bonds PayableInterest ExpensePremium on Bonds Payable	- Select -	- Select -
	Accounts PayableBonds PayableCashInterest ExpensePremium on Bonds Payable	- Select -	- Select -

3. Determine the total interest expense for Year 1. Round to the nearest dollar. $fill in the blank 08c412f4c016067_1