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 $42,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $33,602,520. 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: For a compound transaction, 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. ay- Discount on Bonds Payable. Year 1 July 1 33,602,520 V 8,397,480 Bonds Payable 42,000,000 V Feedback reck 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 2,909,820 X Discount on Bonds Payable 599,820 X Cash 2,310,000