1. On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $33,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $26,401,980. 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: For a compound transaction, if an amount box does not require an entry, leave it blank.

   1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.

   Year 1, July 1	Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable
   	Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable
   	Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable

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   2. Journalize the entries to record the following:

   a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)

   Year 1, Dec. 31	Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable
   	Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable
   	Acounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable

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   b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)

   Year 2, June 30	Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable
   	Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable
   	Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable

   3. Determine the total interest expense for Year 1. $