Question

The Gorman Group issued $940,000 of 13% bonds on June 30, 2021, for $1,010,716. The bonds were dated on June 30 and mature on June 30, 2041 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually on December 31 and June 30. Required: Complete the below table to record the company's journal entry. 1. to 3. Prepare the journal entries to record their issuance by The Gorman Group on June 30, 2021, interest on December 31, 2021 and interest on June 30, 2022 (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).) December 31, 2021 Amount Interest Rate Interest expense $ 1,010,716 x 6.0% = Cash $ 940,000 6.5% = Amortization of premium on bonds $ $ $ Total 60,643 61,100 457 Total June 30, 2022 Amount Interest Rate Interest expense 6.0% Cash x 6.5% = Amortization of premium on bonds Calculation Req 1 to 3 >

Answer 1

B C D E F 1 2 3 December 31,2021 4. Interest expenses 5 Cash 6 Amortization of premium on bonds Amount 1010716 * 940000* Interest rate 6%= 6.50%= Total 60642.96 61100 457.04 8 June 30, 2022 9 Interest expenses (1010716-457.04) 10 Cash 11 Amortization of premium on bonds 1010259 * 940000 * 6%= 6.50% =1 60615.54 61100 484.46 12 12

А в со F 2 December 31,2021 4 Interest expenses 5 Cash 6 Amortization of premium on bonds Amount 1010716 940000 Interest rate * 10.06 * 0.065 Total = =B4*D4 = I=B5*D5 =F5-F4 8 June 30, 2022 9 Interest expenses (1010716-457.04) =B4-F6 10 Cash 940000 11 Amortization of premium on bonds * 10.06 * 10.065 =B9*D9 =B10*D10 =F10-F9

C D 1 2 A В JOURNAL ENTRIES : DATE ACCOUNTS & EXPLANATION 01-06-2021 Cash a/c 13% Bonds payable a/c Premium on bonds payable a/c |(To record issuance of bonds payable) DEBIT CREDIT 1010716 940000 70716 + o coa 60642.96 457.04 01-12-2021 Interest expenses a/c Amortization of premium on bonds I Cash a/c (To record interest expenses) 61100 11 12 13 60615.54 484.46 14 01-06-2022 Interest expenses a/c Amortization premium on bonds payable a/c Cash a/c |(TO record interest expenses) 15 61100 16 17