Question

The Gorman Group issued $890,000 of 9% bonds on June 30, 2018, for $978,079. The bonds were dated on June 30 and mature June 30, 2038 (20 years). The market yiel and June 30 ld for bonds of similar risk and maturity is 8%. Interest is paid semiannually on December 31 Required: Complete the below table to recotd the company's journal entry 1. to 3. Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2018, interest on December 31, interest on June 30, 2019 (at the effective rate). Complete this question by entering your answers in the tabs below Calculation Req 1 to 3 Complete the below table to record the company's journal entry. (Round intermediate calculations and final answers to the nearest whole dollar. Enter interest rate to 1 decimal place. (i.e. 0.123 should be entered as 12.3).) Interest Rate ember 31, 2018 Interest expense Cash Amount Amortization of premium on bonds June 30, 2019 Amount Interest Rate Total Interest expense Cash Amortization of premium on bonds Calculation

Answer 1

December 31,2018	Amount		Interest Rate		Total
Interest expense	978079	x	8%*1/2	=	39123
Cash	890000	x	9%*1/2	=	40050
Amortization of premium on bonds					927
June 30,2019	Amount		Interest Rate		Total
Interest expense	978079-927 = 977152	x	8%*1/2	=	39086
Cash	890000	x	9%*1/2	=	40050
Amortization of premium on bonds					964

Journal entries:

Date	Accounts title and explanation	Debit($)	Credit($)
June 30,2018	Cash	978079
	Bond Payable		890000
	Premium on issuance of Bonds		88079
December,2018	Interest Expense	39123
	Premium on issuance of Bonds	927
	Cash		40050
June 30,2019	Interest Expense	39086
	Premium on issuance of Bonds	964
	Cash		40050