Bond Discount, Entries for Bonds Payable Transactions On July 1, Year 1, 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 with a compound transaction, 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, Year 1. For a compound transaction, if an amount box does not require an entry, leave it blank. 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 straight-line method. (For a compound transaction, if an amount box does not require an entry, leave it blank. Round to the nearest dollar.) b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (For a compound transaction, if an amount box does not require an entry, leave it blank. Round to the nearest dollar.) 3. Determine the total interest expense for Year 1. Round to the nearest dollar.
Bond Discount, Entries for Bonds Payable Transactions
On July 1, Year 1, 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
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. For a compound transaction, if an amount box does not require an entry, leave it blank.
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 straight-line method. (For a compound transaction, if an amount box does not require an entry, leave it blank. Round to the nearest dollar.)
b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. (For a compound transaction, if an amount box does not require an entry, leave it blank. Round to the nearest dollar.)
3. Determine the total interest expense for Year 1. Round to the nearest dollar.
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