Question

Pr 12-2b bond discount, entries for bonds payable transactions

Answer 1

1. journalize the entry to record the amount of cash proceeds from the issuance of the bonds on july 1, 2016.

Cash                                                     42,309,236
Discount on bonds payable             3,690,764
                           Bonds payable                                           46,000,000

2. journalize the entries to record the following: 
a. the first semiannual interest payment on december 31, 2016, and the amortization of the bond discount, using the straight-line method. (round to the nearest dollar. 

Interest Expense                2,327,007.98
                      Discount on Bonds Payable              92,269.10
                      Cash                                                    2,234,738.88

b. the interest payment on june 30, 2017, and the amortization of the bond discount, using the straight-line method. (round to the nearest dollar. 

nterest Expense                2,327,007.98
                      Discount on Bonds Payable              92,269.10
                      Cash                                                    2,234,738.88

3. determine the total interest expense for 2016. 
42,309,236 x 11% = 4,654,015.96 annual interest expense
4,654,015.96 x 6/12 = 2,327,007.98 semi annual expense