On May 1, 2023, Medum Corporation issued a 3-year bond worth $402,000 with an interest rate...

   

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On May 1, 2023, Medum Corporation issued a 3-year bond worth $402,000 with an interest rate of 9% per annum. Interest is to be paid semi-annually on October 31 and April 30. At the time of the issuance, the market interest rate was 4%. Medum Corporation amortizes any premium or discount using the effective interest method. Calculate the bond issue price and the resulting premium or discount. Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole number. For transactions with more than one debit or credit, enter the accounts in alphabetical order. For bond calculations, use the PV tables in Chapter 7 of the textbook or use a financial calculator. Bond Issue Price: $ Premium or Discount: $ b) Prepare journal entries to record the following bonds payable transactions. 1) Issuance of bonds on May 1, 2023. Date Account Title and Explanation May 1 To record bond issuance Debit Credit 2) Payment of interest and amortization of premium or discount on October 31, 2023. Date Account Title and Explanation Debit Credit Oct 31 To record first payment of interest and amortization 3) Accrual of interest and amortization of premium or discount on December 31, 2023, which is the company's year-end. Date Account Title and Explanation Debit Credit Dec 31 To record the interest accrued on bonds payable 4) Payment of interest and amortization of premium or discount on April 30, 2024. Account Title and Explanation Date Apr 30 Debit Credit To record payment of interest and amortization 5) Redemption of the bond for its carrying value one year before maturity on May 1. Account Title and Explanation Date May 1 Debit Credit Redemption of bond On May 1, 2023, Medum Corporation issued a 3-year bond worth $402,000 with an interest rate of 9% per annum. Interest is to be paid semi-annually on October 31 and April 30. At the time of the issuance, the market interest rate was 4%. Medum Corporation amortizes any premium or discount using the effective interest method. Calculate the bond issue price and the resulting premium or discount. Do not enter dollar signs or commas in the input boxes. Round your answers to the nearest whole number. For transactions with more than one debit or credit, enter the accounts in alphabetical order. For bond calculations, use the PV tables in Chapter 7 of the textbook or use a financial calculator. Bond Issue Price: $ Premium or Discount: $ b) Prepare journal entries to record the following bonds payable transactions. 1) Issuance of bonds on May 1, 2023. Date Account Title and Explanation May 1 To record bond issuance Debit Credit 2) Payment of interest and amortization of premium or discount on October 31, 2023. Date Account Title and Explanation Debit Credit Oct 31 To record first payment of interest and amortization 3) Accrual of interest and amortization of premium or discount on December 31, 2023, which is the company's year-end. Date Account Title and Explanation Debit Credit Dec 31 To record the interest accrued on bonds payable 4) Payment of interest and amortization of premium or discount on April 30, 2024. Account Title and Explanation Date Apr 30 Debit Credit To record payment of interest and amortization 5) Redemption of the bond for its carrying value one year before maturity on May 1. Account Title and Explanation Date May 1 Debit Credit Redemption of bond