ond Fremium, Cntries for Donds Faysbe Traresctions camppel Inc. roduces and sell

Question

ond Fremium, Cntries for Donds Faysbe Traresctions camppel Inc. roduces and sells outdoor equpment. On Ju Year Car ocell ssued $67 700,000 ot ?0 yeac 14% 2orcs at ma et e tec ve rterest rse ot ?3%, rece g cash or $71 429 979 Interest on the oords s paysse sem ern aly on c ecember 31 a dure 30. The tiscal year ot the company s Required IF amount bax dex not rw.irw an wntry, wave it bHank 1. 2curnaize the entry to record the amount or cesn proceeds from tne ssuance of the bonds on July 1, veer L. Donds Paysble . The hrst semiann-el interest peyment on December 31, Yeer , andthe amorization ot the bond premium, usng the straight-line method. (Round to the nearest doller) E. The interest peyment on ure 30, Year 2, and the amartzet on ct the bond prem um, using the strezight-Ine methoc. Round to the nearest do lar.) 7 (Round to 5. Como te the price of 71,429,979 received for the bonds by using Dibr 5 and Exhicit 7. (Round to the neerest dolar.) Your totel may very sightty from the price given due to rounsng cifferences Price received for the bonds

Explanation / Answer

Jul 1 year 1:
cash(db) 71,429,979
bonds payable(cr) 67,700,000
Bonds premium(cr) 3729979
2a)
Dec 31 Year 1:
Interest expense(db) 4925499
premium on bonds payable(db) =3729979/20=186499
cash(cr)67700000*(14%/2)=4739000
2b)
Jul 31 Year 2:
Interest expense(db) 4925499
premium on bonds payable(db) =3729979/20=186499
cash(cr)67700000*(14%/2)=4739000

3)interest expense for year 1=4925499

4)Yes

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