n?wörk He Legacy issues $680,000 of 6.5%, four-year bonds dated January 1, 2017,

Question

n?wörk He Legacy issues $680,000 of 6.5%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December31, They are issued at $603,061 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 belovw Required 1 Required 2 Required 3 Required 4 Prepare the January 1, 2017, journal entry to record the bonds' issuance View transaction list Journal entry worksheet

Explanation / Answer

1)

2);

Interest paid semiannually :680000*.065*6/12 = 22100

semiannual months =4*2 =8

Total interest expense = Total interest paid +discount on bond payable

             =[22100*8] +76939

           = 176800+76939

             = 253739

3)

4)

Date Account Debit credit 1 jan 2017 cash 603061 Discount on bond payable 76939 Bond payable 680000 [Being bond issued at discount]

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