Bond Premium, Entries for Bonds Payable Transactions

Rodgers Corporation produces and sells football equipment. On July 1, Year 1, Rodgers Corporation issued $54,400,000 of 10-year, 10% bonds at a market (effective) interest rate of 8%, receiving cash of $61,793,314. 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 8d2510f44f94011_2	fill in the blank 8d2510f44f94011_3
		fill in the blank 8d2510f44f94011_5	fill in the blank 8d2510f44f94011_6
		fill in the blank 8d2510f44f94011_8	fill in the blank 8d2510f44f94011_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 ab429705404bfcf_2	fill in the blank ab429705404bfcf_3
		fill in the blank ab429705404bfcf_5	fill in the blank ab429705404bfcf_6
		fill in the blank ab429705404bfcf_8	fill in the blank ab429705404bfcf_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 55a1d5fa3fd3fb9_2	fill in the blank 55a1d5fa3fd3fb9_3
		fill in the blank 55a1d5fa3fd3fb9_5	fill in the blank 55a1d5fa3fd3fb9_6
		fill in the blank 55a1d5fa3fd3fb9_8	fill in the blank 55a1d5fa3fd3fb9_9

3. Determine the total interest expense for Year 1. Round to the nearest dollar. $fill in the blank a6064108ffc3016_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 $61,793,314 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 a6064108ffc3016_3
Present value of the semiannual interest payments	fill in the blank a6064108ffc3016_4
Price received for the bonds	$fill in the blank a6064108ffc3016_5