On July 1, 2010, Linux Corporation, a wholesaler of electronics equipment, issued \$45,000,000 of 10-year, 10% bonds at an effective interest rate of 14%, receiving cash of \$35,465,423. Interest on the bonds is payable semiannually on December 31 and June

On July 1, 2010, Linux Corporation, a wholesaler of electronics equipment, issued \$45,000,000 of 10-year, 10% bonds at an effective interest rate of 14%, receiving cash of \$35,465,423. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Instructions
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, 2010, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2011, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2010.

This problem has been solved!

Related Book For

Accounting

ISBN: 978-0324662962

23rd Edition

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

Question Details
Chapter # 14- Long-Term Liabilities: Bonds and Notes
Section: Problem Set B
Problem: 5
Posted Date: December 11, 2011 05:17:15