Question 5 of 6 1.67 / 2.5 View Policies Show Attempt History Current Attempt in Progress On June 30, 2020, Ivanhoe Company issued $3,551,000 face value of 13%, 20-year bonds at $3,818,140, a yield of 12%. Ivanhoe uses the effective interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. (a) Your answer is correct. 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 O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) (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. No. Date Account Titles and Explanation Debit Credit (1) June 30, 2020 Cash 3818140 Question 5 of 6 1.67 / 2.5 (4) The payment of interest and the amortization of the premium on December 31, 2021. No. Date Account Titles and Explanation Debit Credit (1) June 30, 2020 Cash 3818140 Premium on Bonds Payable 267 Bonds Payable 3551 (2) December 31, 2020 Interest Expense 229088 Premium on Bonds Payable 1727 Cash 230 (3) June 30, 2021 Interest Expense 228985 Premium on Bonds Payable 1830 Cash 230 (4) December 31, 2021 Interest Expense 228875 Premium on Bonds Payable 1940 Cash 230 Question 5 of 6 1.67 / 2.5 (b) Your answer is correct. 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, eg. 38,548.) Ivanhoe Company Balance Sheet December 31, 2021 Long-term Liabilities Bonds Payable $ 3,551,000 Premium on Bonds Payable 261,643 Book Value of Bonds Payable $ 3.812,643 e Textbook and Media List of Accounts Attempts: 1 of 3 used Question 5 of 6 1.67 / 2.5 (c) Provide the answers to the following questions. (1) What amount of interest expense is reported for 2021? (Round answer to 0 decimal places, eg. 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 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 O decimal places, eg. 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-liner e Textbook and Media
