Question
NatureGnome Company plans to raise the capital by issuing $ 1000,000 of 7 %, seven -year bonds on January2, 2020 . The bonds pay interest
NatureGnomeCompany plans to raise the capital by issuing$ 1000,000 of7%,seven-year bonds on January2,2020. The bonds pay interest semiannually on June 30 and December 31. The company receives$997,900when the bonds are issued.The company also issues a mortgage payable for$600,000on January2,2020. The proceeds from the mortgage will be used to construct the new building. The mortgage requires annual payments of$60,000plus interest fortenyears, payable on December 31. The mortgage interest rate is8%.
Please help me journalize.
Jan. 2 2020 - Cash received from bond issue
Jan. 2 2020 - Cash received from the mortgage payable
Jun.30 2020 -Semiannual bond interest payments for2020
Amortize the premium or discount using thestraight-line amortization method.
Start by recording the semiannual bond interest payment on June30,2020
Now record the semiannual bond interest payment on December31, 2020
Payment on the mortgage payable for 2020
Calculate the total interest expense incurred in2020
Bonds -
Mortgage -
Total =
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