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.

1.Journalize the entry to record the amount of cash proceeds from the sale of the bonds
2. Journalize the entries to record the following
a.The first semiannual interest payment on december 31,2012 and the amortization of the bond discount, using the interest method.
b.the interest payment on june 30,2013 and the amortization of the bond discount, using the interest method.
3. Determine the total expense for 2012

Explanation / Answer

1. Journalize the entry to record the amount of cash proceeds from the sale of the bonds
Cash.................................... 19200577
    Discounts on Bonds Payable..................... 4799423
    Bond Payable...................................... 24000000

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