Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $3,300,000 of 5-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $3,178,543. 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. Cash fill in the blank 82c4590b0fc5027_2 fill in the blank 82c4590b0fc5027_3 Discount on Bonds Payable fill in the blank 82c4590b0fc5027_5 fill in the blank 82c4590b0fc5027_6 Bonds Payable fill in the blank 82c4590b0fc5027_8 fill in the blank 82c4590b0fc5027_9 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. Interest Expense fill in the blank 474450fe4fc2ff7_2 fill in the blank 474450fe4fc2ff7_3 Discount on Bonds Payable fill in the blank 474450fe4fc2ff7_5 fill in the blank 474450fe4fc2ff7_6 Cash fill in the blank 474450fe4fc2ff7_8 fill in the blank 474450fe4fc2ff7_9 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 fill in the blank 8bd2abf52021021_2 fill in the blank 8bd2abf52021021_3 Discount on Bonds Payable fill in the blank 8bd2abf52021021_5 fill in the blank 8bd2abf52021021_6 Cash fill in the blank 8bd2abf52021021_8 fill in the blank 8bd2abf52021021_9 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $fill in the blank 73818a04300ff8a_1 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes 5. Compute the price of $3,178,543 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $fill in the blank 73818a04300ff8a_3 Present value of the semiannual interest payments fill in the blank 73818a04300ff8a_4 Price received for the bonds $fill in the blank 73818a04300ff8a_5

Bond Discount, Entries for Bonds Payable Transactions On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $3,300,000 of 5-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $3,178,543. 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. Cash fill in the blank 82c4590b0fc5027_2 fill in the blank 82c4590b0fc5027_3 Discount on Bonds Payable fill in the blank 82c4590b0fc5027_5 fill in the blank 82c4590b0fc5027_6 Bonds Payable fill in the blank 82c4590b0fc5027_8 fill in the blank 82c4590b0fc5027_9 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. Interest Expense fill in the blank 474450fe4fc2ff7_2 fill in the blank 474450fe4fc2ff7_3 Discount on Bonds Payable fill in the blank 474450fe4fc2ff7_5 fill in the blank 474450fe4fc2ff7_6 Cash fill in the blank 474450fe4fc2ff7_8 fill in the blank 474450fe4fc2ff7_9 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 fill in the blank 8bd2abf52021021_2 fill in the blank 8bd2abf52021021_3 Discount on Bonds Payable fill in the blank 8bd2abf52021021_5 fill in the blank 8bd2abf52021021_6 Cash fill in the blank 8bd2abf52021021_8 fill in the blank 8bd2abf52021021_9 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $fill in the blank 73818a04300ff8a_1 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest? Yes 5. Compute the price of $3,178,543 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount $fill in the blank 73818a04300ff8a_3 Present value of the semiannual interest payments fill in the blank 73818a04300ff8a_4 Price received for the bonds $fill in the blank 73818a04300ff8a_5

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Bond Discount, Entries for Bonds Payable Transactions

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $3,300,000 of 5-year, 11% bonds at a market (effective) interest rate of 12%, receiving cash of $3,178,543. 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.

Cash	fill in the blank 82c4590b0fc5027_2	fill in the blank 82c4590b0fc5027_3
Discount on Bonds Payable	fill in the blank 82c4590b0fc5027_5	fill in the blank 82c4590b0fc5027_6
Bonds Payable	fill in the blank 82c4590b0fc5027_8	fill in the blank 82c4590b0fc5027_9

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.

Interest Expense	fill in the blank 474450fe4fc2ff7_2	fill in the blank 474450fe4fc2ff7_3
Discount on Bonds Payable	fill in the blank 474450fe4fc2ff7_5	fill in the blank 474450fe4fc2ff7_6
Cash	fill in the blank 474450fe4fc2ff7_8	fill in the blank 474450fe4fc2ff7_9

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	fill in the blank 8bd2abf52021021_2	fill in the blank 8bd2abf52021021_3
Discount on Bonds Payable	fill in the blank 8bd2abf52021021_5	fill in the blank 8bd2abf52021021_6
Cash	fill in the blank 8bd2abf52021021_8	fill in the blank 8bd2abf52021021_9

3. Determine the total interest expense for 20Y1. Round to the nearest dollar.
$fill in the blank 73818a04300ff8a_1

4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
Yes

5. Compute the price of $3,178,543 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar. Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount	$fill in the blank 73818a04300ff8a_3
Present value of the semiannual interest payments	fill in the blank 73818a04300ff8a_4
Price received for the bonds	$fill in the blank 73818a04300ff8a_5

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