On July 1, 20Y1, Livingston Corporation, a manufacturing equipment wholesaler, issued $46,000,000 10% 20-year bonds at an 11% market (effective) interest rate and received $42,309,236 in cash. Interest on the bonds is payable semi-annually on December 31 and June 30. The company's fiscal year is the calendar year.

Required:

For all journal entries, if an amount box does not require an entry, leave it blank.

1. Record in the journal the entry to record the amount of cash proceeds from the bond issue on July 1, 20Y1.

20Y1 July 1	Money
	Discount on Bonds Payable
	Obligations with the public

Comment

Bonds payable are always recorded at face value. Any difference in the issue price is reflected in a premium or discount account.

2. Make journal entries to record the following:

to. The first semi-annual interest payment on December 31, 20Y1 and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.

20Y1 December 31	Interest expenses
	Discount on Bonds Payable
	Money

Comment

The straight-line amortization method provides equal amounts of amortization over the life of the bond.

b. Interest payment on June 30, 20Y2 and amortization of the discount on the bond, using the straight-line method. Round to the nearest dollar.

20Y2 June 30	Interest expenses
	Discount on Bonds Payable
	Money

Calculate the price of $42,309,236 received for the bonds using the present value tables in Appendix A. Round your PV values to 5 decimal places and final answers to the nearest dollar. Your total may vary slightly from the listed price due to rounding differences.

Present value of nominal amount	ps
Present value of semi-annual interest payments
Price received for the bonds	ps