Legacy issues $550,000 of 9.5%, four-year bonds dated January 1, 2017, that pay interest semiannually on June 30 and December 31. They are issued at $507,301 and their market rate is 12% at the issue date.
Required:
1. Prepare the January 1, 2017, journal entry to record the bonds' issuance.
2. Complete the below table to calculate the total bond interest expense to be recognized over the bonds' life.

  3. Prepare an effective interest amortization table for the bonds' first two years.

Transcribed Image Text:

Total bond interest expense over life of bonds: Amount repaid: payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense $ 0 0 Total bond interest expense over life of bonds: Amount repaid: payments of Par value at maturity Total repaid Less amount borrowed Total bond interest expense $ 0 0

Answer rating: 100% (QA)

To address each of the requirements lets start with the first item 1 Prepare the January 1 2017 journal entry to record the bonds issuance The bonds w... View the full answer