1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 Cash 73100469 Premium on Bonds Payable 8100469 Bonds Payable 65000000 Feedback Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 Interest Expense 3494977 Premium on Bonds Payable 405023 Cash 3900000 Feedback The straight-line method of amortization provides equal amounts of amortization over the life of the bond. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 Interest Expense 3494977 Premium on Bonds Payable 405023 Cash 3900000 Feedback 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $fill in the blank b676b00b8fdc001_1 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 Cash 73100469 Premium on Bonds Payable 8100469 Bonds Payable 65000000 Feedback Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 Interest Expense 3494977 Premium on Bonds Payable 405023 Cash 3900000 Feedback The straight-line method of amortization provides equal amounts of amortization over the life of the bond. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 Interest Expense 3494977 Premium on Bonds Payable 405023 Cash 3900000 Feedback 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $fill in the blank b676b00b8fdc001_1 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar.
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 Cash 73100469 Premium on Bonds Payable 8100469 Bonds Payable 65000000 Feedback Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account. 2. Journalize the entries to record the following: a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 Interest Expense 3494977 Premium on Bonds Payable 405023 Cash 3900000 Feedback The straight-line method of amortization provides equal amounts of amortization over the life of the bond. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar. 20Y2 June 30 Interest Expense 3494977 Premium on Bonds Payable 405023 Cash 3900000 Feedback 3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $fill in the blank b676b00b8fdc001_1 4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest? 5. Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar.
Bond Premium, Entries for Bonds Payable Transactions
Rodgers Corporation produces and sells football equipment. On July 1, 20Y1, Rodgers issued $65,000,000 of 10-year, 12% bonds at a market (effective) interest rate of 10%, receiving cash of $73,100,469. 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, 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, 20Y1.
20Y1 July 1
Cash
73100469
Premium on Bonds Payable
8100469
Bonds Payable
65000000
Feedback
Bonds Payable is always recorded at face value. Any difference in issue price is reflected in a premium or discount account.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
20Y1 Dec. 31
Interest Expense
3494977
Premium on Bonds Payable
405023
Cash
3900000
Feedback
The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
20Y2 June 30
Interest Expense
3494977
Premium on Bonds Payable
405023
Cash
3900000
Feedback
3. Determine the total interest expense for 20Y1. Round to the nearest dollar. $fill in the blank b676b00b8fdc001_1
4. Will the bond proceeds always be greater than the face amount of the bonds when the contract rate is greater than the market rate of interest?
5. Compute the price of $73,100,469 received for the bonds by using the present value tables in Appendix A. Round your PV values to 5 decimal places and the final answers to the nearest dollar.
Present value of the face amount
Present value of the semi-annual interest payments
Price received for the bonds
Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.
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