Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Bond Discount, Entries for Bonds Payable Transactions On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, Issued $4,300,000 of 8-year, 10% bonds

image text in transcribed
image text in transcribed
Bond Discount, Entries for Bonds Payable Transactions On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, Issued $4,300,000 of 8-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $4,075,065. 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 on July 1, Year 1. For a compound transaction, If an amount box does not require an entry, leave it blank. Cash 4075.15 Discount on Bonds Payable 224,935 Bonds Payable 100,000 2. Joumalize the entries to record the following: For a compound transaction, if an amount box does not require an entry, leave it blank. Round your answer to the nearest dollar. a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. Interest Expense Discount on Bonds Payable 14,058 Cash 1 215,000 b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. Interest Expense 229,058 Discount on Bonds Payable Cash 215,000 3. Determine the total interest expense for Year 1. Round to the nearest dollar. 229,058 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes 5. Compute the price of $4,075,065 received for the bonds by using Table 1, Table 2, Table 3 and Table 4. (Round to the nearest dollar.) Your total may vary slightly from the price given due to rounding differences. Present value of the face amount . Present value of the semiannual interest payments Price received for the bonds

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Statistical Analysis Microsoft Excel 2013

Authors: Conrad Carlberg

1st Edition

0789753111, 9780789753113

More Books

Students also viewed these Accounting questions