Bond Discount, Entries for Bonds Payable Transactions, Interest Method of Amortizing Bond Discount

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $41,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $32,802,460. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.

For all journal entries, if an amount box does not require an entry leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds. 2011 July 1 Cash 32.802,460 Discount on Bonds Payable 8,197.540 Bonds Payable 41,000,000 a. The first semiannual interest payment on December 31, 2041, and the amortization of the bond discount, using the in 2011 Dec. 31 Interest Expense 2,296,172 Discount on Bonds Payable 1.172 Cash 2,255.000 b. The interest payment on June 30, 2012, and the amortization of the bond discount, using the interest methoc 2012 June 30 Interest Expense 2,296,172 X Discount on Bonds Payable Cash 2,255,000