Answer:
Yale Corporation
Journal Entries:
a. January 1, 2020:
Debit Cash $44,878
Debit Premium on bonds $3,122
Credit 8% Bonds Payable $48,000
To record issuance of the bonds.
b. June 30, 2020:
Debit Interest Expense $2,020
Credit Bond Discounts $100
Credit Cash $1,920
To record the first payment of interest.
Explanation:
a) Data and Calculations:
January 1, 2020:
Face value of bonds = $48,000
Price of bonds =           $44,878
Discounts on bonds =    $3,122
Coupon interest rate = 8%
Interest payment = semiannually on June 30 and December 31
Maturity period = 10 years
Effective interest rate = 9%
June 30, 2020:
Interest Expense      $2,020 ($44,878 * 4.5%)
Cash payment             1,920 ($48,000 * 4%)
Discount amortization $100
Value of Bonds =   $44,978 ($44,878 + $100)
December 31, 2020:
Interest Expense      $2,024 ($44,978 * 4.5%)
Cash payment             1,920 ($48,000 * 4%)
Discount amortization $104
Value of Bonds =   $45,082 ($44,978 + $104)
N (# of periods)  20
I/Y (Interest per year)  9
PMT (Periodic Payment)  1920
FV (Future Value)  48000
Results
PV = $44,878.10
Sum of all periodic payments	$38,400.00
Total Interest	$41,521.90