Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. They are issued at $292,181 when the market rate is 8%. Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 3. Prepare an effective interest amortization table for the bonds' first two years. 4. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare an effective interest amortization table for the bonds' first two years. Note: Round your intermediate and final answers to the nearest whole dollar. Semiannual Interest Cash Interest Bond Interest Period-End Paid Expense 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 $ 8,125 8,125 8,125 8,125 < Required 2 Discount Amortization Unamortized Discount Required 4 > Carrying Value 32,819 $ 292,181

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31.
They are issued at $292,181 when the market rate is 8%.
Required:
1. Prepare the January 1 journal entry to record the bonds' issuance.
2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
3. Prepare an effective interest amortization table for the bonds' first two years.
4. Prepare the journal entries to record the first two interest payments.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Required 3
Required 4
Prepare an effective interest amortization table for the bonds' first two years.
Note: Round your intermediate and final answers to the nearest whole dollar.
Semiannual Interest Cash Interest
Paid
Period-End
01/01/2021
06/30/2021
12/31/2021
06/30/2022
12/31/2022
$
8,125
8,125
8,125
8,125
Bond Interest
Expense
< Required 2
Discount
Amortization
Unamortized
Discount
Required 4 >
Carrying Value
32,819 $
292,181
Transcribed Image Text:Legacy issues $325,000 of 5%, four-year bonds dated January 1, 2021, that pay interest semiannually on June 30 and December 31. They are issued at $292,181 when the market rate is 8%. Required: 1. Prepare the January 1 journal entry to record the bonds' issuance. 2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 3. Prepare an effective interest amortization table for the bonds' first two years. 4. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare an effective interest amortization table for the bonds' first two years. Note: Round your intermediate and final answers to the nearest whole dollar. Semiannual Interest Cash Interest Paid Period-End 01/01/2021 06/30/2021 12/31/2021 06/30/2022 12/31/2022 $ 8,125 8,125 8,125 8,125 Bond Interest Expense < Required 2 Discount Amortization Unamortized Discount Required 4 > Carrying Value 32,819 $ 292,181
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