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 12. Journalize the entries to record the following:a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, usingthe straight-line method. Round to the nearest dollar.20Y1 Dec. 31b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-linemethod. Round to the nearest dollar.20Y2 June 303. Determine the total interest expense for 20Y1. Round to the nearest dollar.$DD4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than themarket rate of interest?5. Compute the price of $5,018,833 received for the bonds by using the Present value at compound interest, andPresent value of an annuity. Round your PV values to 5 decimal places and the final answers to the nearestdollar. Your total may vary slightly from the price given due to rounding differences.Present value of the face amountPresent value of the semiannual interest paymentsProceeds of bond issue Bond discount, entries for bonds payable transactionsOn July 1, 20Y1, Livingston Equipment Co., a wholesaler of manufacturing equipment, issued $5,700,000 of 10-year,9% bonds at a market (effective) interest rate of 11%, receiving cash of $5,018,833. Interest on the bonds ispayable 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 12. Journalize the entries to record the following:a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, usingthe straight-line method. Round to the nearest dollar.20Y1 Dec. 31b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the straight-linemethod. Round to the nearest dollar.20Y2 June 30B3. Determine the total interest expense for 20Y1. Round to the nearest dollar.$4. Will the bond proceeds always be less than the face amount of the bonds when the contract rate is less than themarket rate of interest?5. Compute the price of $5,018,833 received for the bonds by using the Present value at compound interest, andPresent value of an annuity. Round your PV values to 5 decimal places and the final answers to the nearest

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or 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 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 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

or 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 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 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

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Campbell, Inc. produces and sells outdoor equipment. On July 1, 20Y1, Campbell issued $40,000,000 of 10-year, 10% bonds at a market (effective) interest rate of 9%, receiving cash of $42,601,480. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 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 interest method. b. The interest payment on June 30, 20Y2, and the amortization of the bond premium, using the interest method. 3. Determine the total interest expense for 20Y1.
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