lendar 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. Year 1 July 1 Cash Cash Discount on Bonds Payable Discount
On July 1, Year 1, Danzer Industries Inc. issued $56,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $44,803,360. 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
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.
| Year 1 July 1 |
|
Cash | Cash |
|
|
Discount on Bonds Payable | Discount on Bonds Payable | |
|
|
Bonds Payable | Bonds Payable |
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
| Year 1 Dec. 31 |
|
Interest Expense | Interest Expense |
|
|
Discount on Bonds Payable | Discount on Bonds Payable | |
|
|
Cash | Cash |
b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
| Year 2 June 30 |
|
Interest Expense | Interest Expense |
|
|
Discount on Bonds Payable | Discount on Bonds Payable | |
|
|
Cash | Cash |
3. Determine the total interest expense for Year 1.
Trending now
This is a popular solution!
Step by step
Solved in 6 steps with 7 images
