On March 1, 2015, Bruce Graham Corporation issued $10,000,000 of five-year, 6% bonds to finance its expansion

Question:

On March 1, 2015, Bruce Graham Corporation issued $10,000,000 of five-year, 6% bonds to finance its expansion of operations. The bonds, which pay interest on August 31 and February 28 or 29, were issued at an effective interest rate of 5%, resulting in Bruce Graham Corporation receiving cash of $10,437,603.20. Bruce Graham Corporation is a privately held company and has opted to use the straight-line method of amortization.

a. Journalize the entries to record the following:

1. Sale of the bonds.

2. First semiannual interest payment and premium amortization.

3. Adjusting entry for interest expense at the October 31 year-end.

4. Second semiannual interest payment and discount amortization.

b. Determine the amount of bond interest expense for the fiscal year ended October 31, 2015.

c. Show the reporting of the liabilities related to the bonds on the balance sheet at October 31, 2015, rounding to the nearest whole dollar.

Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...