The Gorman Group issued $860,000 of 9% bonds on June 30, 2018, for $945110. The

Question

The Gorman Group issued $860,000 of 9% bonds on June 30, 2018, for $945110. The bonds were dated on June 30 and mature on June 30, 2038 (20 years). The market yield for bonds of similar risk and maturity is 8%, interest is paid semiannually on December 31 and June 30. nts Complete the below table to record the company's journal entry. 1. to 3. Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2018, Interest on December 31, 2018 and interest on June 30, 2019 (at the effective rate). Complete this question by entering your answers in the tabs below Req 1 to 3 nearest whole dollar. Enter interest rate to 1 decimal place. (Le, 0.123 should be entered as 12.3).) 31, 2018 nt une 30, 2019

Explanation / Answer

Dec 31, 2018 Amount Interest Rate Total Interest Expense $9,45,110.00 X 4% = $37,804.40 Cash $8,60,000.00 X 5% = $38,700.00 Amortisation of Premium on Bond $895.60 June 30, 2019 Amount Interest Rate Total Interest Expense (945110-895.60) $9,44,214.40 X 4.0% = $37,768.58 Cash $8,60,000.00 X 4.5% = $38,700.00 Amortisation of Premium on Bond $931.42

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