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

Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $54,000,000 of 20-year, 14% bonds at a market (effective) interest rate of 12%, receiving cash of $62,111,880. 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, 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.

20Y1 July 1	Cash
	Premium 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 premium, using the interest method. Round to the nearest dollar.

20Y1 Dec. 31	Interest Expense
	Premium on Bonds Payable
	Cash

b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. Round to the nearest dollar.

20Y2 June 30	Interest Expense
	Premium on Bonds Payable
	Cash

3. Determine the total interest expense for 20Y1. Round to the nearest dollar.