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Journalize the entry to record the amount of cash proceeds

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Question - Fabulator, Inc. produces and sells fashion clothing. On July 1, 2012, Fabulator, Inc. issued $120,000,000 of 20-year, 14% bonds at a market (effective) interest rate of 11%, receiving cash of $148,882,608. Interest on the bonds is payable semiannually 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.

1. Journalize the entry to record the amount of cash proceeds from the sale of the bonds.

2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, 2012, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar.)

b. The interest payment on June 30, 2013, and the amortization of the bond premium, using the interest method. (Round to the nearest dollar)

3. Determine the total interest expense for 2012.

Reference no: EM132076755

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