Problem:
Wishaw, Inc. produces and sells outdoor equipment. On July 1, 2014, Wishaw, Inc. issued $150,000,000 of 20-year, 12% bonds at a market (effective) interest rate of 9%, receiving cash of $191,403,720. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year.
Required:
Question 1: Journalize the entry to record teh amount of cash proceeds from the issuance of the bonds
Question 2: Journalize the entries to record the following:
a- The first semiannual interest payment on December 31, 2014, and the amortization of the bond premium using the straight line method.
b- The interest payment on June 30, 2015, and the amortization of the bond premium using the interest method
Question 3: Determine the total interest expense for 2014
Note: Be sure to show how you arrived at your answer.