Instructions
1. Journalize the entry to record the amount of cash proceeds from the issuance of the bonds.
2. Journalize the entries to record the following:
a. The first semiannual interest payment on December 31, 2014, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
b. The interest payment on June 30, 2015, and the amortization of the bond discount, using the interest method. (Round to the nearest dollar.)
3. Determine the total interest expense for 2014.
Answer:

1. 2014
July 1 Cash 91,420,905
Discount on Bonds Payable 8,579,095
Bonds Payable 100,000,000
2. a. 2014
Dec. 31 Interest Expense* 4,571,045
Discount on Bonds Payable 71,045
Cash 4,500,000
*$91,420,905 × 5.0%
b. 2015
June 30 Interest Expense* 4,574,598
Discount on Bonds Payable 74,598
Cash 4,500,000
*($91,420,905 + $71,045) × 5.0%
3. $4,571,045