Bond Premium, Entries for Bonds Payable Transactions

Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $22,900,000 of 10-year, 13% bonds at a market (effective) interest rate of 11%, receiving cash of $25,636,658. 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 on July 1, Year 1.

		fill in the blank 337907ff7fc9000_2	fill in the blank 337907ff7fc9000_3
		fill in the blank 337907ff7fc9000_5	fill in the blank 337907ff7fc9000_6
		fill in the blank 337907ff7fc9000_8	fill in the blank 337907ff7fc9000_9

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 premium, using the straight-line method. Round to the nearest dollar.

		fill in the blank 201b43fd906d001_2	fill in the blank 201b43fd906d001_3
		fill in the blank 201b43fd906d001_5	fill in the blank 201b43fd906d001_6
		fill in the blank 201b43fd906d001_8	fill in the blank 201b43fd906d001_9

b. The interest payment on June 30, Year 2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.

		fill in the blank 1c1fc2004ffc018_2	fill in the blank 1c1fc2004ffc018_3
		fill in the blank 1c1fc2004ffc018_5	fill in the blank 1c1fc2004ffc018_6
		fill in the blank 1c1fc2004ffc018_8	fill in the blank 1c1fc2004ffc018_9

3. Determine the total interest expense for Year 1. Round to the nearest dollar. $fill in the blank 0eb7d3f9501107a_1

4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?

5. Compute the price of $25,636,658 received for the bonds by using Present value at compound interest, and Present value of an annuity. Round to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount	$fill in the blank 0eb7d3f9501107a_3
Present value of the semiannual interest payments	fill in the blank 0eb7d3f9501107a_4
Price received for the bonds	$fill in the blank 0eb7d3f9501107a_5

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