Reference no: EM13906797
Bond Premium, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Premium.
Fabulator, Inc. produces and sells fashion clothing. On July 1, 2014, Fabulator, Inc. issued $96,000,000 of 20-year, 14% bonds at a market (effective) interest rate of 12%, receiving cash of $110,421,120. Interest on the bonds is payable semi annually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
For all journal entries with a compound transaction, if an amount box does not require an entry, leave it blank or enter "0".
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.
2. Journalize the entries to record the following:
a. The first semi annual interest payment on December 31, 2014, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2015, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2014.
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: Fabulator, Inc. produces and sells fashion clothing. On July 1, 2014, Fabulator, Inc. issued $96,000,000 of 20-year, 14% bonds at a market (effective) interest rate of 12%, receiving cash of $110,421,120. Interest on the bonds is payable semi annuall..
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