Reference no: EM132013844
Problem - On July 1, 2014, Kellerman Company issued $4,366,900, 8%, 10-year bonds at $3,822,690. This price resulted in an effective-interest rate of 10% on the bonds. Kellerman uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest July 1 and January 1.
Prepare the journal entries to record the following transactions. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(1) The issuance of the bonds on July 1, 2014.
(2) The accrual of interest and the amortization of the discount on December 31, 2014.
(3) The payment of interest and the amortization of the discount on July 1, 2015, assuming no accrual of interest on June 30.
(4) The accrual of interest and the amortization of the discount on December 31, 2015.
Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2015, balance sheet. (For Bonds Payable, Notes Payable and Mortgage payable enter the account name only and do not provide any additional descriptive information e.g. due 2024.)
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