PR 14-3A Bond premium, entries for bonds payable transactionsO’Halloran, Inc. produces and sells outdoor equipment. On July 1, Year 1,O’Halloran, Inc. issued $32,000,000 of 6-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $33,546,022. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.Instructions1. Journalize the entry to record the amount of cash proceeds from the issuance of the bond on July 1, Year 1.2. Journalize the entries to record the following:a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.b. The second semiannual interest payment on June 30, Year 2, and theamortization of the bond premium, using the straight-line method. Round to the nearest dollar.3. Determine the total interest expense for Year 1. Problem 14-3AQuestion 1Question 2Question 3a.b.WrongWrongWrongWrongWrongWrongWrongWrongWrong PR 14-3A Bond premium, entries for bonds payable transactionsO'Halloran, Inc. produces and sells outdoor equipment. On July 1, Year 1,O'Halloran, Inc. issued $32,000,000 of 6-year, 8% bonds at a market (effective)interest rate of 7%, receiving cash of $33,546,022. Interest on the bonds ispayable semiannually on December 31 and June 30. The fiscal year of thecompany is the calendar year.Instructions1. Journalize the entry to record the amount of cash proceeds from theissuance of the bond on July 1, Year 1.2. Journalize the entries to record the following:a. The first semiannual interest payment on December 31, Year 1, and theamortization of the bond premium, using the straight-line method.Round to the nearest dollar.b. The second semiannual interest payment on June 30, Year 2, and theamortization of the bond premium, using the straight-line method.Round to the nearest dollar.3. Determine the total interest expense for Year 1.

The journal entries are prepared to record the transactions of the business on regular basis. The…

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FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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PR 14-3A Bond premium, entries for bonds payable transactions
O’Halloran, Inc. produces and sells outdoor equipment. On July 1, Year 1,O’Halloran, Inc. issued $32,000,000 of 6-year, 8% bonds at a market (effective) interest rate of 7%, receiving cash of $33,546,022. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Instructions
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bond on July 1, Year 1.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, Year 1, and the amortization of the bond premium, using the straight-line method. Round to the nearest dollar.
b. The second semiannual interest payment on June 30, Year 2, and theamortization of the bond premium, using the straight-line method.
Round to the nearest dollar.
3. Determine the total interest expense for Year 1.

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