Bond discount, entries for bonds payable transactionsOn July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturingequipment, issued $46,000,000 of 20-year, 10% bonds at a market(effective) interest rate of 11%, receiving cash of $42,309,236. Interest onthe bonds is payable semiannually on December 31 and June 30. Thefiscal year of the company is the calendar year.Instructions1. Journalize the entry to record the amount of cash proceeds fromthe issuance of the bonds on July 1, 20Y1.2. Journalize the entries to record the following:a. The first semiannual interest payment on December 31,2071, and the amortization of the bond discount, using thestraight-line method. Round to the nearest dollar.b. The interest payment on June 30, 20Y2, and theamortization of the bond discount, using the straight-linemethod. Round to the nearest dollar. 3. Determine the total interest expense for 20Y1.4. Will the bond proceeds Nways be less than the face amount ofthe bonds when the contract rate is less than the market rate ofinterest?5. (Appendix 1) Compute the price of $42,309,236 received for thebonds by using the present value tables in Appendix A at the end ofthe text. Round to the nearest dollar.
Bond discount, entries for bonds payable transactions
On July 1, 20Y1, 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.
Instructions
1.
the issuance of the bonds on July 1, 20Y1.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31,
2071, and the amortization of the bond discount, using the
straight-line method. Round to the nearest dollar.
b. The interest payment on June 30, 20Y2, and the
amortization of the bond discount, using the straight-line
method. Round to the nearest dollar.
3. Determine the total interest expense for 20Y1.
4. Will the bond proceeds Nways be less than the face amount of
the bonds when the contract rate is less than the market rate of
interest?
5. (Appendix 1) Compute the price of $42,309,236 received for the
bonds by using the present value tables in Appendix A at the end of
the text. Round to the nearest dollar.
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