Question 3

On June 30, 2017, Teal Company issued $3,900,000face value of13%,20-year bonds at $4,193,395, a yield of12%. Teal uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

Question 3 On June 30, 2017, Teal Company issued $3,900,000 face value of 13%, 20-year bonds at $4,193,395, a yield of 12%. Teal 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) (2) (3) (4) No . The The The The issuance of the bonds on June 30, 2017. payment of interest and the amortization of the premium on December 31, 2017. payment of interest and the amortization of the premium on June 30, 2018. payment of interest and the amortization of the premium on December 31, 2018. Date (1) June 30, 2017 (2) December 31, 2017 (3) June 30, 2018 (4) December 31, 2018 Account Titles and Explanation Debit Credit SHOW LIST OF ACCOUNTS LINK TO TEXT Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.) Teal Company Balance Sheet $ $ SHOW LIST OF ACCOUNTS LINK TO TEXT Provide the answers to the following questions. (1) What amount of interest expense is reported for 2018? (Round answer to 0 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 bond interest expense reported in 2018 will be 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 the total interest expense if the straight-line method of amortization were used