Question - On June 30, 2010 Mackes Company issued 5,000,000 face value of 13%, 20 year bonds at 5,376,150, a yield of 12%. Mackes uses the effective-interest method to amotize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.
A) Prepare the journal entries to record the following transactions.
1-the issuance of the bonds on June 30, 2010
2-the payment of interest and the amortization of the premium on December 31,2010
3-The payment of interest and the amortization of the premium on June 30, 2011
4-the payment of interest and the amortization of the premium on December 31, 2011
B) Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2011, balance sheet.