On June 30, 2020, Marigold Company issued $3,600,000 face value of 14%, 20-year bonds at $4,141,660, a yield of 12%. Marigold 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 0 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, 2020. |
| (2) | | The payment of interest and the amortization of the premium on December 31, 2020. |
| (3) | | The payment of interest and the amortization of the premium on June 30, 2021. |
| (4) | | The payment of interest and the amortization of the premium on December 31, 2021. |
Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.)
Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to 0 decimal places, e.g. 38,548.)
| Interest expense reported for 2021 | | $ |
(2) Will the bond interest expense reported in 2021 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 bond interest expense reported in 2021 will be (greater than,less than,same) as the amount that would be reported 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 0 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 bond interest expense for the life of the bond will be (greater than,less than,the same) as the total interest expense if the straight-line method of amortization were used. |
On June 30, 2020, Marigold Company issued $3,600,000 face value of 14%, 20-year bonds at $4,141,660, a yield of 12%. Marigold 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 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (2) (3) (4) The issuance of the bonds on June 30, 2020. The payment of interest and the amortization of the premium on December 31, 2020. The payment of interest and the amortization of the premium on June 30, 2021. The payment of interest and the amortization of the premium on December 31, 2021. Account Titles and Explanation Debit Credit Date June 30, 2020 Cash 4,141.660 Premium on Bonds Payable 541,660 Bonds Payable 3,600,000 December 31, 2020 Interest Expense 248,500 Premium on Bonds Payable 3,500 Cash 252,000 June 30, 2021 Interest Expense 248,290 Premium on Bonds Payable 3,710 Cash 252,000 December 31, 2021 Interest Expense 248,067 Premium on Bonds Payable 3,933 Cash 252,000 Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet. (Round answers to O decimal places, e.g. 38,548.) Marigold Company Balance Sheet December 31, 2021 Long-term Liabilities Bonds Payable $ 3,600,000 Unamortized Bond Issue Costs Book Value of Bonds Payable $ Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to O decimal places, e.g. 38,548.) Interest expense reported for 2021 $ (2) Will the bond interest expense reported in 2021 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 bond interest expense reported in 2021 will be v the amount that would be reported if the straight-linem (3) Determine the total cost of borrowing over the life of the bond. (Round answer to 0 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 bond interest expense for the life of the bond will be v the total interest expense if the straight-liner On June 30, 2020, Marigold Company issued $3,600,000 face value of 14%, 20-year bonds at $4,141,660, a yield of 12%. Marigold 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 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter Ofor the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (2) (3) (4) The issuance of the bonds on June 30, 2020. The payment of interest and the amortization of the premium on December 31, 2020. The payment of interest and the amortization of the premium on June 30, 2021. The payment of interest and the amortization of the premium on December 31, 2021. Account Titles and Explanation Debit Credit Date June 30, 2020 Cash 4,141.660 Premium on Bonds Payable 541,660 Bonds Payable 3,600,000 December 31, 2020 Interest Expense 248,500 Premium on Bonds Payable 3,500 Cash 252,000 June 30, 2021 Interest Expense 248,290 Premium on Bonds Payable 3,710 Cash 252,000 December 31, 2021 Interest Expense 248,067 Premium on Bonds Payable 3,933 Cash 252,000 Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2021, balance sheet. (Round answers to O decimal places, e.g. 38,548.) Marigold Company Balance Sheet December 31, 2021 Long-term Liabilities Bonds Payable $ 3,600,000 Unamortized Bond Issue Costs Book Value of Bonds Payable $ Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to O decimal places, e.g. 38,548.) Interest expense reported for 2021 $ (2) Will the bond interest expense reported in 2021 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 bond interest expense reported in 2021 will be v the amount that would be reported if the straight-linem (3) Determine the total cost of borrowing over the life of the bond. (Round answer to 0 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 bond interest expense for the life of the bond will be v the total interest expense if the straight-liner
