Question

The Gorman Group issued $850,000 of 13% bonds on June 30, 2018, for $913,945. The bonds...

The Gorman Group issued $850,000 of 13% bonds on June 30, 2018, for $913,945. The bonds were dated on June 30 and mature on June 30, 2038 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually on December 31 and June 30.

Required:
Complete the below table to record the company's journal entry.

1. to 3. Prepare the journal entry to record their issuance by The Gorman Group on June 30, 2018, interest on December 31, 2018 and interest on June 30, 2019 (at the effective rate).

Complete the below table to record the company's journal entry. (Round intermediate calculations and final answers to the nearest whole dollar. Enter interest rate to 1 decimal place. (i.e. 0.123 should be entered as 12.3).)
December 31, 2018 Amount Interest Rate Total
Interest expense x =
Cash x =
Amortization of premium on bonds
June 30, 2019 Amount Interest Rate Total
Interest expense x =
Cash x =
Amortization of premium on bonds
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