Question
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
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, 20Y1.
Cash
Premium on Bonds Payable
Bonds Payable
Feedback
Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account.
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 straight-line method. Round to the nearest dollar.
Interest Expense
Premium on Bonds Payable
Cash
Feedback
The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
Interest Expense
Premium on Bonds Payable
Cash
Feedback
The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $
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? Yes
5. Compute the price of $54,030,319 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.
Present value of the face amount$
Present value of the semi-annual interest payments
Price received for the bonds$
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