On June 30, 2020, Blossom Limited issued $2 million of 20-year, 13% bonds for $2,320,916, which provides a yield of 11%. The company uses the effective interest method to amortize any bond premium or discount. The bonds pay semi-annual interest on June 30 and December 31. Prepare the journal entries to record the following transactions: (Round answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) 1. The issuance of the bonds on June 30, 2020 2. The payment of interest and the amortization of the premium on December 31, 2020 3. The payment of interest and the amortization of the premium on June 30, 2021 The payment of interest and the amortization of the premium on December 31, 2021

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On June 30, 2020, Blossom Limited issued $2 million of 20-year, 13% bonds for $2,320,916, which provides a yield of 11%. The
company uses the effective interest method to amortize any bond premium or discount. The bonds pay semi-annual interest on June
30 and December 31.
Prepare the journal entries to record the following transactions: (Round answers to O decimal places, eg. 5,275. Credit account titles
are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account
titles and enter O for the amounts.)
1.
The issuance of the bonds on June 30, 2020
2.
The payment of interest and the amortization of the premium on December 31, 2020
3.
The payment of interest and the amortization of the premium on June 30, 2021
4.
The payment of interest and the amortization of the premium on December 31, 2021
Debit
Credit
Date
Account Titles and Explanation
June 30,
2020
Dec. 31,
2020
Show the proper presentation for the liability for bonds payable on the December 31, 2020 SFP. (Round answer to 0 decimal places
e.g. 5,275.)
Blossom Limited
Statement of Financial Position (Partial)
What amount of interest expense is reported for 2020?
Interest expense to be reported $
List of Accounts
What is the total cost of borrowing over the life of the bond? (Round answer to 0 decimal places, eg. 5,275.)
$
Total cost of borrowing over the life of the bond
List of Accounts
Transcribed Image Text:On June 30, 2020, Blossom Limited issued $2 million of 20-year, 13% bonds for $2,320,916, which provides a yield of 11%. The company uses the effective interest method to amortize any bond premium or discount. The bonds pay semi-annual interest on June 30 and December 31. Prepare the journal entries to record the following transactions: (Round answers to O decimal places, eg. 5,275. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) 1. The issuance of the bonds on June 30, 2020 2. The payment of interest and the amortization of the premium on December 31, 2020 3. The payment of interest and the amortization of the premium on June 30, 2021 4. The payment of interest and the amortization of the premium on December 31, 2021 Debit Credit Date Account Titles and Explanation June 30, 2020 Dec. 31, 2020 Show the proper presentation for the liability for bonds payable on the December 31, 2020 SFP. (Round answer to 0 decimal places e.g. 5,275.) Blossom Limited Statement of Financial Position (Partial) What amount of interest expense is reported for 2020? Interest expense to be reported $ List of Accounts What is the total cost of borrowing over the life of the bond? (Round answer to 0 decimal places, eg. 5,275.) $ Total cost of borrowing over the life of the bond List of Accounts
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