Question: On June 30, 2018, Macias SA issued R$5,000,000 face value of 13%, 20-year bonds at R$5,376,150 to yield 12%. The bonds pay semiannual interest on

On June 30, 2018, Macias SA issued R$5,000,000 face value of 13%, 20-year bonds at R$5,376,150 to yield 12%. The bonds pay semiannual interest on June 30 and December 31.
Instructions
a. Prepare the journal entries to record the following transactions.
1. The issuance of the bonds on June 30, 2018.
2. The payment of interest and the amortization of the premium on December 31, 2018.
3. The payment of interest and the amortization of the premium on June 30, 2019.
4. The payment of interest and the amortization of the premium on December 31, 2019.
b. Show the proper statement of financial position presentation for the liability for bonds payable on the December 31, 2019, statement of financial position.
c. Provide the answers to the following questions.
1. What amount of interest expense is reported for 2019?
2. Determine the total cost of borrowing over the life of the bond.

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a 1 June 30 2018 Cash 5376150 Bonds Payable 5376150 2 December 31 2018 Interest Expense R5376150 X 1... View full answer

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