Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $2,900,000 of 5-year, 9% bonds at a market (effective) interest rate of 11%,

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $2,900,000 of 5-year, 9% bonds at a market (effective) interest rate of 11%, receiving cash of $2,681,408. 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. Question Content Area 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. blank Cash Cash Cash Discount on Bonds Payable Discount on Bonds Payable Discount on Bonds Payable Bonds Payable Bonds Payable Bonds Payable Question Content Area 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 straight-line method. Round to the nearest dollar. blank Interest Expense Interest Expense Interest Expense Discount on Bonds Payable Discount on Bonds Payable Discount on Bonds Payable Cash Cash Cash Question Content Area b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. blank Interest Expense Interest Expense Interest Expense Discount on Bonds Payable Discount on Bonds Payable Discount on Bonds Payable Cash Cash Cash Question Content Area 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $fill in the blank fa0f83f2f028f89_1 152,359 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes 5. Compute the price of $2,681,408 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $fill in the blank fa0f83f2f028f89_3 Present value of the semiannual interest payments fill in the blank fa0f83f2f028f89_4 Price received for the bonds $fill in the blank

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy

13th Canadian Edition

1119740444, 9781119740445

More Books

Students also viewed these Accounting questions

Question

Which of the sources is most cost effective?

Answered: 1 week ago