Question
Legacy issues $550,000 of 9.5%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at
Legacy issues $550,000 of 9.5%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $507,301 and their market rate is 12% at the issue date.
Required:
1. Prepare the January 1, 2017, journal entry to record the bonds' issuance. 2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 3. Prepare an effective interest amortization table for the bonds' first two years. 4. Prepare the journal entries to record the first two interest payments.
Required 1 Required 2 Required 3 Required 4 Prepare the January 1, 2017, journal entry to record the bonds' issuance. View transaction list View journal entry worksheet Debit Credit No 1 Date Jan 01, 2017 General Journal Bond interest expense Cash Discount on bonds payable 26,125 Required 1 Required 2 > Required 1 Required 2 Required 3 Required 4 Complete the below table to calculate the total bond interest expense to be recognized ou Total bond interest expense over life of bonds: Amount repaid: payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense $ 0 Required 1 Required 2 Required 3 Required 4 Prepare an effective interest amortization table for the bonds' first two years. Semiannual Interest Period-End 01/01/2017 Cash Interest Bond Interest Paid Expense Discount Amortization Unamortized Discount Carrying Value 06/30/2017 12/31/2017 06/30/2018 12/31/2018 Required 1 Required 2 Required 3 Required 4 Prepare the journal entries to record the first two interest payments. View transaction list Journal entry worksheet Record the first interest payment on June 30, 2017. Note: Enter debits before credits. Date General Journal Debit Credit Jun 30, 2017 Record entry Clear entry View general journal Required 1 Required 2 Required 3 Required 4 Prepare the journal entries to record the first two interest payments. View transaction list Journal entry worksheetStep by Step Solution
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