On July 1, 2017, Global Satellites Corporation issued $1.5 million of 10-year, 7% bonds to yield a market interest rate of 6%. The bonds pay semi-annual interest on July 1 and January 1. Global has a December 31 year end. When the bonds were issued, Global received $1,611,587.
Instructions
(a) Prepare an amortization table through January 1, 2019 (three interest periods) for this bond issue. Round all amounts to the nearest dollar.
(b) Record the issue of the bonds on July 1.
(c) Prepare the adjusting entry on December 31, 2018, to accrue the interest on the bonds.
(d) Show the statement of financial position presentation of the liabilities at December 31, 2018.
(e) Record the payment of interest on January 1, 2019.
(f) Prove the issue proceeds of the bonds on July 1, 2017, by calculating the present value of the bonds at that time.