Legacy issues $650,000 of 5.0%, four-year bonds dated January 1, 2017, that pay

Question

Legacy issues $650,000 of 5.0%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $584,361 and their market rate is 8% at the issue date. Required: 1. Prepare the January 1, 2017, journal entry to record the bonds' issuance. 2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life. 3. Prepare an effective interest amortization table for the bonds' first two years. 4. Prepare the journal entries to record the first two interest payments. Complete this question by entering your answers in the tabs below Required 1 Required 2Required 3 Required 4 re an effective interest amortization table for the bonds' first two years. Cash Interest Bond Interest Discount U Unamortized Carrying Value Interest Period-End 01/01/2017 06/30/2017 12/31/2017 06/30/2018 12/31/2018 Paid Expense Amortization Discount Required 2 Required 4 )

Explanation / Answer

3 SemiannualInterest Period­End Cash Interest Paid Bond Interest Expense Discount Amortization Unamortized Discount Carrying Value 1/1/2017 65639 584361 6/30/2017 16250 23374 7124 58515 591485 12/31/2017 16250 23659 7409 51106 598894 6/30/2018 16250 23956 7706 43400 606600 12/31/2018 16250 24264 8014 35386 614614

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