Bond premium, entries for bonds payable transactions Rodgers Gridiron Co. produces and sells football equipment. On July 1, 20Y1, Rodgers issued $72,000,000 of 10-year, 13% bonds at a market (effective) interest ra of 12%, receiving cash of $76,128,826. 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, 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 on July 1, 20Y1. 20Y1 July 1 Cash Premium on Bonds Payable Bonds Payable 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the near dollar. 20Y1 Dec. 31 Interest Expense Interest Payable Cash b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 Interest Expense Premium on Bonds Payable Cash 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
Bond premium, entries for bonds payable transactions Rodgers Gridiron Co. produces and sells football equipment. On July 1, 20Y1, Rodgers issued $72,000,000 of 10-year, 13% bonds at a market (effective) interest ra of 12%, receiving cash of $76,128,826. 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, 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 on July 1, 20Y1. 20Y1 July 1 Cash Premium on Bonds Payable Bonds Payable 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the near dollar. 20Y1 Dec. 31 Interest Expense Interest Payable Cash b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 Interest Expense Premium on Bonds Payable Cash 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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