O'Halloran, Inc. produces and sells outdoor equipment. On July 1. Year 1, O'Halloran, Inc., issued $32.000.000 of 6-year, 8% bonds at a market (effective) interest rate of 7%. receiving cash of S33.540.022. Interest on the bonds is payable semiannually on December 31 and June 30. The fscal year of the company is the calendar year. Required: 1. Joumalize the entry to record the amount of cash proceeds from the issuance of the bonda 2. Joumalize the entries to record the following a. The firat semiannual intereat payment on December 31, Year 1, and the amortization of the bond premium, using the intereat method. Round to the nearest dollar. b. The intereat payment on June 30, Year 2, and the amortization of the bond premium, using the intereat method. Round to the nearest dollar. 3. Determine the total intereat expense for Year 1. "Refer to the chart of accounts for the exact wording of the account titles. CNOW joumals do not use ines for joumal explanations. Every line on a journal page is used for debit or credit entries. CNOW joumals will automatically indent a credit entry when a credit amount is entered.

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Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.