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On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $6,800,000 of 9-year, 8%...

On July 1, 20Y1, Livingston Corporation, a wholesaler of manufacturing equipment, issued $6,800,000 of 9-year, 8% bonds at a market (effective) interest rate of 10%, receiving cash of $6,005,104. Interest on the bonds is payable semiannually on December 31 and June 30. The fiscal year of the company is the calendar year. Required: For all journal entries, if an amount box does not require an entry, leave it blank. 1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds on July 1, 20Y1.

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Journal Entry for recording the cash proceeds from the issuance of the bonds on July 1, 20Y1 will be as follows:

Cash received on the issue of Bonds is debited by $6,005,104, Liability on the issuance of Bonds will be credited by its par value i.e. $6,800,000 and the difference between the cash received and bonds payable will be the discount on bonds payable, will be debited and amortized during the life of the bonds.

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