Bond discount, entries for bonds payable transactions

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $1,600,000 of 5-year, 8% bonds at a market (effective) interest rate of 10%, receiving cash of $1,476,447. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.

20Y1 July 1 Cash $_________

Discount on Bonds Payable $__________

Bonds Payable $__________

2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method.

20Y1 Dec 31. Interest Expense $__________

Discount on Bonds Payable $__________

Cash $_________

b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method.

20Y2 June 30. Interest Expense $__________

Premium on Bonds Payable $__________

Cash $_________

3. Compute the price of $1,476,447 received for the bonds by using the Present value at compound interest and Present value of an annuity. Round your PV values to 5 decimal places and the final answers to the nearest dollar.

Present value of face amount $__________

Present value of the semi-annual interest payments $__________

_________________

Proceeds of bond issue $___________