Johnson Corp. issued bonds twice during 2010. Prepare entries in journal form to record the bond transactions.
2010 Jan. 1- Issued $1,000,000 of 9.2%, 10 year bond dated Jan. 1, 2010 with interest payable on June 30 and Dec. 31.The bonds were sold at 98.1, resulting in an effective interest rate of 9.5%.
April 1- Issued $2,000,000 of 9.8%, 10 yr bonds dated April 1, 2010 with interest payable on March 31 ans Sep. 30. The bonds were sold at 101, resulting in and effective interest rate of 9.5%.
June 30- Paid semiannual interest on Jan. 1 issue and amortized the discount, uing the effective interest method.
Sep. 30- Paid semiannual interest on April 1 issue and amortized the premium, using the effective interest method.
Dec. 31- Paid semiannual interest on Jan. 1 issue and amortized the discount, using the effectice interest method.
Dec. 31- Made an end-of-year adjusting entry to accrue interest on the April 1 issue and to amortize half the premium applicable to the second interest period.
2011 March 31-Paid semiannual interest on the April 1 issue and amortized the premium applicable to the second half of second interest period.
1. Prepare journal entries to record bond transactions (round to the nearest dollar)
a. What is the total interest expense for 2010 on issue bonds?
b. What is the total cash paid in 2010 for each bond issues?
c. What differences, if any, explain