Monday, 18 March 2019

Legacy issues $740,000 of 7.5%, four-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. They are issued at $680,186 and their market rate is 10% at the issue date.

Legacy issues $740,000 of 7.5%, four-year bonds dated January 1, 2015, that pay interest semiannually on June 30 and December 31. They are issued at $680,186 and their market rate is 10% at the issue date.

Prepare the January 1, 2015, journal entry to record the bonds' issuance.
Prepare the January 1, 2015, journal entry to record the bonds' issuance.

Determine the total bond interest expense to be recognized over the bonds' life.
Determine the total bond interest expense to be recognized over the bonds' life

Explanation:

Prepare a straight-line amortization table for the bonds' first two years.
Prepare a straight-line amortization table for the bonds' first two years

Straight-line amortization table ($59,814 / 8 = $7,477)
Prepare the journal entries to record the first two interest payments
Prepare the journal entries to record the first two interest payments

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