On December 31, 20 Upper X 120X1, the Miller Company purchased $6 million of 5-year, 10% debentures for $6,486,654. The market interest rate was 8%.

Requirement 1. Using the balance sheet equation format, prepare an analysis of transactions for theinvestor's records. Key your transactions as follows: (a) purchase, (b) first semiannual interest payment using effective interest amortization of bond premium, and (c) payment of maturity value. (Enter amounts in dollars, and round to the nearest whole dollar. Use a minus sign or parentheses for a decrease in an accounting equation component. Leave unused cells blank.)

Assets = liabilities Stockholders equity

	Cash	In Bonds=	payable	interest revenue	interest expense
(A) Purchase
(B) Semiannual Interest
(C) Maturity

Requirement 2. Prepare the journal entries that correspond to (a), (b), and (c) of requirement 1. (Record debits first, then credits. Explanations are not required.)

(account choices)

Bonds payable, Cash, interest expense, interest revenue, Investment in bonds

(a) Purchase

Accounts Debit Credit

(b) First semiannual interest payment

Accounts Debit Credit

(c) Payment of maturity value

Accounts Debit Credit

Requirement 3. Show how the bond-related accounts would appear on the balance sheets as of December31,

20X1,and June 30,20X2.

Select the section of the balance sheet, then the balance sheet account name(s) and amounts. (Leave any unused cells blank.)

Balance Sheet Presentation December 31 20X2 June 30 20X2

Choices for Balance Sheet Presentation

Bond investment at face value, Bond investment at historical cost, Bond investment net of unamoratized premium