Lindley Manufacturing Corporation (Lindley) issued $5,000,000 par value of 8%, 10 year, Series C, Bonds to Ohio Insurance Corporation on March 1, 2X01. Interest is payable semi-annually on September 1 and March 1. Lindley received $4,900,000 from Ohio Insurance Corporation for the bonds. Lindley also paid the following in connection with the bond issue: $120,000 for work by the accounting firm of Corlett & Daley, $70,000 for work by the law firm of Voinovich & Johnson, and $10,000 to the financial printing firm of Ohio Printers, Inc.
Lindley uses a premium or discount account to record differences between par value and book value and uses the amortization of bond discount or premium as required by ASC 835 (Codification of APB Opinion 21). Bond issue costs are amortized separately. Lindley is a publicly-held company required to file quarterly statements. Lindley’s year end is December 31. Effective Interest rate is 4.159%
a. Prepare the bond amortization schedule
b. Record the issuance of the bonds by Lindley Manufacturing Corporation.
c. Show any accrual or transactional journal entries (in proper form) required by Lindley in order for it to prepare required financial statements for 2X01 and 2X02.