Exercise 14-09 (Part Level Submission)

On June 30, 2020, Seashore Company issued $4,180,000 face value of 13%, 20-year bonds at $4,494,460, a yield of 12%. Seashore uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Collapse question part (a) Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

(1) The issuance of the bonds on June 30, 2020.

(2) The payment of interest and the amortization of the premium on December 31, 2020.

(3) The payment of interest and the amortization of the premium on June 30, 2021.

(4) The payment of interest and the amortization of the premium on December 31, 2021.

(b)Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet.

(c) Provide the answers to the following questions. What amount of interest expense is reported for 2021? Will the Interest Expense reported in 2021 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used? Determine the total cost of borrowing over the life of the bond. Will the total Interest Expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used?