Bond Premium, Entries for Bonds Payable Transactions

Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $68,600,000 of 10-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $77,923,186. 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 with 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 on July 1, Year 1.

		fill in the blank b3712cff7063fcb_2	fill in the blank b3712cff7063fcb_3
		fill in the blank b3712cff7063fcb_5	fill in the blank b3712cff7063fcb_6
		fill in the blank b3712cff7063fcb_8	fill in the blank b3712cff7063fcb_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 cb6379098feb072_2	fill in the blank cb6379098feb072_3
		fill in the blank cb6379098feb072_5	fill in the blank cb6379098feb072_6
		fill in the blank cb6379098feb072_8	fill in the blank cb6379098feb072_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 790ac9fd2fff06e_2	fill in the blank 790ac9fd2fff06e_3
		fill in the blank 790ac9fd2fff06e_5	fill in the blank 790ac9fd2fff06e_6
		fill in the blank 790ac9fd2fff06e_8	fill in the blank 790ac9fd2fff06e_9

3. Determine the total interest expense for Year 1. Round to the nearest dollar. $fill in the blank 18fa210b503bf9c_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 $77,923,186 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	$fill in the blank 18fa210b503bf9c_3
Present value of the semiannual interest payments	fill in the blank 18fa210b503bf9c_4
Price received for the bonds	$fill in the blank 18fa210b503bf9c_5