The Gorman Group issued $810,000 of 11% bonds on June 30, 2013, for $879,498. The bonds were dated on June 30 and mature on June 30, 2033 (20 years). The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually on December 31 and June 30.
| Complete the below table to record the company's journal entry. (Enter interest rate to 1 decimal place.) |
| December 31, 2013 |
Amount |
|
Interest Rate |
|
Total |
| Interest expense |
|
x |
|
= |
|
| Cash |
|
x |
|
= |
|
| Amortization of premium on bonds |
|
|
|
|
|
|
|
| June 30, 2014 |
Amount |
|
Interest Rate |
|
Total |
| Interest expense |
|
x |
|
= |
|
| Cash |
|
x |
|
= |
|
| Amortization of premium on bonds |
|
| 1. |
Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2013. (If no entry is required for a transaction, select "No journal entry required" in the first account field.)
| Date |
General Journal |
Debit |
Credit |
| June 30, 2013 |
Cash |
|
|
|
Bonds Payable |
|
|
|
|
|
|
|
|
|
|
| 2. |
Prepare the journal entry to record interest on December 31, 2013 (at the effective rate). (If no entry is required for a transaction, select "No journal entry required" in the first account field.)
| Date |
General Journal |
Debit |
Credit |
| December 31, 2013 |
Interest expense |
|
|
|
Premium on bonds payable |
|
|
|
Cash |
|
|
3.Prepare the journal entry to record interest on June 30, 2014 (at the effective rate). (If no entry is required for a transaction, select "No journal entry required" in the first account field.)
| Date |
General Journal |
Debit |
Credit |
| June 30, 2014 |
Interest expense |
|
|
|
Premium on bonds payable |
|
|
|
cash |
|
|
|
|
|