Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. 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.    Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 1. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable  Journalize the entries to record the following:  The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Interest Revenue Notes Payable 3. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable   The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30. 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable  Determine the total interest expense for 20Y1. Fill in the blank 3.  Determine the total interest expense for 20Y1.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Bond Discount, Entries for Bonds Payable Transactions

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. 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

1.

  • Accounts Payable
  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

2.

  • Accounts Payable
  • Bonds Payable
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

3.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable
  •  Journalize the entries to record the following:
  •  The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.

20Y1 Dec. 31

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Notes Payable

2.

  • Bonds Payable
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Interest Revenue
  • Notes Payable

3.

  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Notes Payable
  • Premium on Bonds Payable
  1.   The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.

20Y2 June 30.

1.

  • Bonds Payable
  • Cash
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

2.

  • Accounts Payable
  • Bonds Payable
  • Discount on Bonds Payable
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable

3.

  • Accounts Payable
  • Bonds Payable
  • Cash
  • Interest Expense
  • Interest Payable
  • Premium on Bonds Payable
  •  Determine the total interest expense for 20Y1.
    Fill in the blank

3.  Determine the total interest expense for 20Y1.

Bond Discount, Entries for Bonds Payable Transactions
On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. 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 v
42,309,236 v
Discount on Bonds Payable v
3,690,764 V
Bonds Payable v
46,000,000
Feedback
Check My Work
Bonds Payable
always recorded at face value. Any difference in issue price is reflected in a premium or discount account.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.
20Y1 Dec. 31 Interest Expense v
2,327,008
X
Discount on Bonds Payable v
Cash v
2,300,000
Feedback
Check My Work
The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.
Interest Expense v
20Y2 June 30
2,392,269
Discount on Bonds Payable v
92,269
X
Cash v
2,300,000
Transcribed Image Text:Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $46,000,000 of 20-year, 10% bonds at a market (effective) interest rate of 11%, receiving cash of $42,309,236. 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 v 42,309,236 v Discount on Bonds Payable v 3,690,764 V Bonds Payable v 46,000,000 Feedback Check My Work Bonds Payable always recorded at face value. Any difference in issue price is reflected in a premium or discount account. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 Interest Expense v 2,327,008 X Discount on Bonds Payable v Cash v 2,300,000 Feedback Check My Work The straight-line method of amortization provides equal amounts of amortization over the life of the bond. b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. Interest Expense v 20Y2 June 30 2,392,269 Discount on Bonds Payable v 92,269 X Cash v 2,300,000
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education