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On July 1 , 2 0 Y 1 , Livingston Corporation, a wholesaler of manufacturing equipment, issued $ 4 6 , 0 0 0 ,

On July 1,20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
For all journal entries, if an amount box does not require an entry, leave it blank.
Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.
20 Y1 July 1 Discount on Bonds Payable ,
Bonds Payable
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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 discount, using the interest method. Round to the nearest dollar. q,
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Journalize the entries to record the following:
a. The first semiannual interest payment on December 31,20Y1, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.
20 Y 1 Dec. 31 Interest Expense
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2a. Cash received on July 1,20 Y1 semiannual market rate = Interest Expense (debit). Principal x semiannual contract rate = cash paid (credit). The premium amortized (debit) is the difference between the two amounts.
b. The interest payment on June 30,20Y2, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.
20Y2 June 30
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b. The interest payment on June 30,20Y2, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.
20Y2 June 30
.02.ALGO
.06
.05
11
.04B
2B.GENERALLEDGER
1.12.EXCEL.ALGO
11.03
1.17
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3.20Y1 Interest expense is the amount debited in 2(a).
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