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1057544 december 31 2016 net liability 285349947 2

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1,057,544**December 31, 2016 net liability$285,349,947
2. Interest expense for year ended December 31, 2016
June 30, 2016 interest expense$16,997,683 *Dec. 31, 2016 interest expense17,057,544**Interest expense for 2016$34,055,227January 1, 2016***Cash (price given) = 283,294,720Discount on bonds (difference) = $36,705,280Bonds payable (face amount) = $320,000,000June 30, 2016*Interest expense (6% × $283,294,720) = $16,997,683Discount on bonds payable (difference) = $997,683Cash (5% × $320,000,000) = $16,000,000December 31, 2016**Interest expense (6% × [$283,294,720 + 997,683]) = $17,057,544Discount on bonds payable (difference) = $1,057,544Cash (5% × $320,000,000) = $16,000,000WorksheetDifficulty: 2 MediumLearning Objective: 14­02 Account forbonds issued at face value, at adiscount, or at a premium, recordinginterest using the effective interestmethod or using the straight­line method.eBook & ResourcesReferences
21.Award: 10.00 pointsProblems?Adjust creditfor all students.The Gorman Group issued $900,000 of 13% bonds on June 30, 2016, for $967,707. The bonds were datedon June 30 and mature on June 30, 2036 (20 years). The market yield for bonds of similar risk and maturityis 12%. Interest is paid semiannually on December 31 and June 30.Required:Complete the below table to record the company's journal entry.(Enter interest rate to 1 decimal place.(i.e. 0.123 should be entered as 12.3).)

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Term
Fall
Professor
Millenials
Tags
Accounting, The Gorman Group, Myriad Solutions Inc, 16 997 683, 32 000 000

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