On July 1 2012, bliss industries inc. issued 24,000,000 of 20 year, 11% bonds at

Question

On July 1 2012, bliss industries inc. issued 24,000,000 of 20 year, 11% bonds at a market (effective) interest rate of 14% receiving cash of $19,200,577. Interes on the bonds is payable semiannually on Decemebr 31 and June 30. The fiscal year of he company is the calendar year.

How do i journalize the following
1. the entry to record the amount of cash proceeds from the sale of bonds.
2. Journalize the entries to record
a. the first semiannual interest payment on Dec 31,2012, and the amortization of the bond discount, using the interst method. ( rounding to the nearest dollar)
b. the interest payment on June 30,2013 and the amortization of the bond discount, using the interest method ( rounding to the nearest dollar.
What is the total interest expense for 2012

Explanation / Answer

1) the entry to record amount of cash proceed from sale of bonds is getting cash flow at 14% of cash inflow - $ 24,000,000 . 2) a) first semi annual interest payment = $19,200,577. ammortization = 19 ,200, 577/(1+14/100) =$16842611.84 b) ammortization at june 30 2013 is = 2*16842611.84 = 33685222.80

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