eBook 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 $54,000,000 of 20-year, 11% bonds at a market (effective) interest rate of 14%, receiving cash of $43,203,240. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: 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.

2. Journalize the entries to record the following:

a. The first semiannual interest payment on December 31, 20Y1, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.

b. The interest payment on June 30, 20Y2, and the amortization of the bond discount, using the interest method. Round to the nearest dollar.

3. Determine the total interest expense for 20Y1. Round to the nearest dollar.

2011 July 1 Cash 43,203,240 Discount on Bonds Payable 10,796,760 Bonds Payable 54,000,000 2011 Dec. 31 Interest Expense Discount on Bonds Payable 111 110 Cash 2012 June 30 Interest Expense Discount on Bonds Payable 111 101 Cash