Legacy issues $670,000 of 6.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $624,896 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.
Legacy issues $670,000 of 6.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $624,896 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Legacy issues $670,000 of 6.0%, four-year bonds dated January 1, 2019, that pay interest semiannually on June 30 and December 31. They are issued at $624,896 when the market rate is 8%.
Required:
1. Prepare the January 1
2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
3. Prepare an effective interest amortization table for the bonds' first two years.
4. Prepare the journal entries to record the first two interest payments.
Transcribed Image Text:Required 1
Required 2
Required 3
Required 4
Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.
Total bond interest expense over life of bonds:
Amount repaid:
payments of
Par value at maturity
Total repaid
Less amount borrowed
Total bond interest expense
2$
< Required 1
Required 3 >
Transcribed Image Text:View transaction list
Journal entry worksheet
1
Record the issue of bonds with a par value of $670,000 on January 1 at an
issue price of $624,896.
Note: Enter debits before credits.
Date
General Journal
Debit
Credit
January 01
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