Bond Discount, Entries for Bonds Payable Transactions On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $3,700,000 of 9-year, 10% bonds at a market (effective) interest rate of 12%, receiving cash of $3,299,379. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: Question Content Area 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, Year 1. If an amount box does not require an entry, leave it blank. - Select - - Select - - Select - - Select - - Select - - Select - Question Content Area 2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. Round your answer to the nearest dollar. a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method. - Select - - Select - - Select - - Select - - Select - - Select - Question Content Area b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method. - Select - - Select - - Select - - Select - - Select - - Select - Question Content Area 3. Determine the total interest expense for Year 1. Round to the nearest dollar. $fill in the blank aa746bfec03bfba_1
Bond Discount, Entries for Bonds Payable Transactions
On July 1, Year 1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $3,700,000 of 9-year, 10% bonds at a market (effective) interest rate of 12%, receiving cash of $3,299,379. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
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2. Journalize the entries to record the following: If an amount box does not require an entry, leave it blank. Round your answer to the nearest dollar.
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond discount, using the straight-line method.
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b. The interest payment on June 30, Year 2, and the amortization of the bond discount, using the straight-line method.
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3. Determine the total interest expense for Year 1. Round to the nearest dollar.
$fill in the blank aa746bfec03bfba_1
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 $3,299,379 received for the bonds by using the Present value at compound interest, and Present value of an annuity. (Round 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 aa746bfec03bfba_3 |
| Present value of the semiannual interest payments | fill in the blank aa746bfec03bfba_4 |
| Price received for the bonds | $fill in the blank aa746bfec03bfba_5 |
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