Gus Limited issued $32 million 7.5 percent, 5 year bonds on October 1, 2022. The market rate of interest on the date of the issue was 8 percent. Interest is payable semi-annually on April 1 and October 1. The company's year-end is December 31.

 Required: 

Prepare journal entries to record all transactions during the first year the bonds are outstanding. The company uses the straight-line method of amortizations. 

In good presentation style, indicate how the bond obligation would be shown on the company's year-end statement of financial position.

How much interest expense is shown on the 2022 year end income statement? 

How much interest expense will be shown on the 2023 year end income statement?

Answer rating: 100% (QA)

To record the transactions related to the bonds issued by Gus Limited and determine the interest expense for the 2022 and 2023 yearend income statemen... View the full answer