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. Required: For all journal entries, if an amount box does not require an entry, leave it blank. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 1. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable Journalize the entries to record the following: The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Interest Revenue Notes Payable 3. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30. 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable Determine the total interest expense for 20Y1. Fill in the blank 3. Determine the total interest expense for 20Y1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rateis less than the market rate of interest? 1. Yes No Compute the price of $42,309,236 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. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Fill in the blank Present value of the semiannual interest payments Fill in the blank Price received for the bonds Fill in the blank

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. Required: For all journal entries, if an amount box does not require an entry, leave it blank. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1. 20Y1 July 1 1. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable Journalize the entries to record the following: The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y1 Dec. 31 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Notes Payable 2. Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Interest Revenue Notes Payable 3. Bonds Payable Cash Interest Expense Interest Payable Notes Payable Premium on Bonds Payable The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar. 20Y2 June 30. 1. Bonds Payable Cash Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 2. Accounts Payable Bonds Payable Discount on Bonds Payable Interest Expense Interest Payable Premium on Bonds Payable 3. Accounts Payable Bonds Payable Cash Interest Expense Interest Payable Premium on Bonds Payable Determine the total interest expense for 20Y1. Fill in the blank 3. Determine the total interest expense for 20Y1. 4. Will the bond proceeds always be less than the face amount of the bonds when the contract rateis less than the market rate of interest? 1. Yes No Compute the price of $42,309,236 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. Your total may vary slightly from the price given due to rounding differences. Present value of the face amount Fill in the blank Present value of the semiannual interest payments Fill in the blank Price received for the bonds Fill in the blank

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter13: Long-term Liabilities

Section: Chapter Questions

Problem 5PB: Dixon Inc. issued bonds with a $500,000 face value, 10% interest rate, and a 4-year term on July 1,...

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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.

Required:

For all journal entries, if an amount box does not require an entry, leave it blank.

Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.

20Y1 July 1

Accounts Payable
Bonds Payable
Cash
Interest Expense
Interest Payable
Premium on Bonds Payable

Accounts Payable
Bonds Payable
Discount on Bonds Payable
Interest Expense
Interest Payable
Premium on Bonds Payable

Bonds Payable
Cash
Discount on Bonds Payable
Interest Expense
Interest Payable
Premium on Bonds Payable
Journalize the entries to record the following:
The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.

20Y1 Dec. 31

Bonds Payable
Cash
Discount on Bonds Payable
Interest Expense
Interest Payable
Notes Payable

Bonds Payable
Discount on Bonds Payable
Interest Expense
Interest Payable
Interest Revenue
Notes Payable

Bonds Payable
Cash
Interest Expense
Interest Payable
Notes Payable
Premium on Bonds Payable

The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.

20Y2 June 30.

Bonds Payable
Cash
Discount on Bonds Payable
Interest Expense
Interest Payable
Premium on Bonds Payable

Accounts Payable
Bonds Payable
Discount on Bonds Payable
Interest Expense
Interest Payable
Premium on Bonds Payable

Accounts Payable
Bonds Payable
Cash
Interest Expense
Interest Payable
Premium on Bonds Payable
Determine the total interest expense for 20Y1.
Fill in the blank

3. Determine the total interest expense for 20Y1.

Will the bond proceeds always be less than the face amount of the bonds when the contract rateis less than the market rate of interest?

Compute the price of $42,309,236 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. Your total may vary slightly from the price given due to rounding differences.

Present value of the face amount	Fill in the blank
Present value of the semiannual interest payments	Fill in the blank
Price received for the bonds	Fill in the blank

2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the straight-line method. Round to the nearest dollar.
20Y1 Dec. 31 Interest Expense v
2,327,008
Bonds Payable x
27,008
Cash v
2,300,000
Feedback
Check My Work
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 discount, using the straight-line method. Round to the nearest dollar.
20Y2 June 30 Interest Expense v
2,328,493
X
Bonds Payable X
28,493
Cash v
2,300,000
Feedback
Check My Work
The straight-line method of amortization provides equal amounts of amortization over the life of the bond.
3. Determine the total interest expense for 20Y1.
2,327,008 x
4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than the market rate of interest?
5. Compute the price of $42,309,236 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. Your total may vary slightly from the price given due to rounding differences.
Present value of the face amount
Present value of the semiannual interest payments
Price received for the bonds
Feedback
Check My Work
Calculate the present value of the face amount of the bonds by using the the Present Value of $1 table. Calculate the present value of the semiannual interest payments by using the Present Value of an Annuity of $1 table.

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