Bond Premium, Entries for Bonds Payable Transactions
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 semi annually on December 31 and June 30. The fiscal year of the company is the calendar year.
1. Journalize the entries to record the following:
a. The first semi annual interest payment on December 31, 2014, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
Interest Expense
Premium on Bonds Payable
Cash 9,000,000
b. The interest payment on June 30, 2015, and the amortization of the bond premium, using the straight-line method. (Round to the nearest dollar.)
Interest Expense
Premium on Bonds Payable
Cash 9,000,000
2. Determine the total interest expense for 2014. Round to the nearest dollar.
Answer: $ _________