On June 30, 2017, Sage Company issued $4,600,000 face value of 13%, 20-year bonds at $4,946,056, a yield of 12%. Sage uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions. (Round answer to O decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) The issuance of the bonds on June 30, 2017. (2) The payment of interest and the amortization of the premium on December 31, 2017. (3) The payment of interest and the amortization of the premium on June 30, 2018 (4) The payment of interest and the amortization of the premium on December 31, 2018 Debit No. Date Account Titles and Explanation Credit (1) June 30, 2017 Cash 4946056 Premium on Bonds Payable 346056 4600000 Bonds Payable December 31, (2) 2017 Interest Expense 296763 2237 Premium on Bonds Payable Cash 299000 (3) June 30, 2018Interest Expense 296629 2371 Premium on Bonds Payable Cash 299000 December 31, (4) 2018 Interest Expense 296487 Premium on Bonds Payable 2513 Cash 299000 Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet. (Round answers to O decimal places, e.g. 38,548.) Sage Company Balance Sheet SHOW LIST OF ACCOUNTS Provide the answers to the following questions. (1) What amount of interest expense is reported for 2018? (Round answer to O decimal places, e.g 38,548. Interest expense reported for 2018 (2) Will the bond interest expense reported in 2018 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used? the amount that would be reported The bond interest expense reported in 2018 will be if the straight-line method of amortization were used (3) Determine the total cost of borrowing over the life of the bond. (Round answer to O decimal places, e.g. 38,548.) Total cost of borrowing over the life of the bond (4) Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used? the total interest The total bond interest expense for the life of the bond will be expense if the straight-line method of amortization were used
