Legacy issues $730,000 of 7.0%, four-year bonds dated January 1, 2017, that pay

Question

Legacy issues $730,000 of 7.0%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $659,199 and their market rate is 10% 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 2 Required 3 Required 4 Prepare an effective interest amortization table for the bonds' first two years. Cash Interest Paid Bond Interest Expense Discount Amortization Unamortized Discount Carrying Value Semiannual Interest Period-End 01/01/2017 06/30/2017 12/31/2017 06/30/2018 12/31/2018

Explanation / Answer

Semi-annual interest period Cash interest paid Bond interest expense Discount amortization Unamortized discount Carrying value 1/1/2017 70801 659199 6/30/2017 25550 32960 7410 63391 666609 12/31/2017 25550 33330 7780 55611 674389 6/30/2018 25550 33719 8169 47442 682558 12/31/2018 25550 34128 8578 38864 691136

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