Gary Corporation wholesales bike parts to bicycle manufacturers On March 1, 2015, the first day of its first fiscal year, Gary Corporation issued $8,000,000 of five year, 7 bonds at an effective interest rate of 6 , receiving cash of $8,341,208 11 Interest is payable semiannually on March 1 and Sep...

2015 a Mar 1 Cash 834120811 Premium on Bonds Payable 34120800 Bonds Pa ...

Gary Corporation wholesales bike parts to bicycle manufacturers. On March 1, 2015, the first day of its

Question:

Gary wholesales bike parts to bicycle manufacturers. On March 1, 2015, the first day of its first fiscal year, Gary issued $8,000,000 of five-year, 7% bonds at an effective interest rate of 6%, receiving cash of $8,341,208.11. Interest is payable semiannually on March 1 and September 1, and the company uses the effective interest method for bond premium amortization. Gary has a January 31 year-end.
a. Journalize the entries to record the following:
1. Sale of the bonds.
2. First semiannual interest payment and premium amortization on September 1, 2015.
3. Accrual of interest on January 31, 2016.
4. Second semiannual interest payment and premium amortization on March 1, 2016.
b. Determine the amount of the bond interest expense for the year ended January 31, 2016.
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...