During the year, Shor Company issued several series of bonds. For each bond, record the journal entry that must be made upon the issuance date. (Round to the nearest dollar; a calculator is needed for 2 and 3.)

On January 20, a series of 15-year, $1,000 par value bonds with annual interest of 8 percent was issued at a price giving a current yield to maturity of 6.5 percent. Issuance costs for the 7,000 bonds issued were $250,000. Interest is paid annually

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To record the journal entry for the issuance of the bonds, we need to calculate the total proceeds from the bond issuance and allocate any issuance costs.

Here's how to calculate the total proceeds:

1. Calculate the annual interest payment (interest expense):
Annual interest payment = Par value of the bonds * Annual interest rate
Annual interest payment = $1,000 * 8% = $80

2. Calculate the bond price (issuance proceeds):
Current yield to maturity = Annual interest payment / Bond price * 100
6.5% = $80 / Bond price * 100

Rearranging the equation, we get:
Bond price = $80 / (6.5% / 100) = $1,230.77

3. Calculate the total proceeds:
Total proceeds = Bond price * Number of bonds issued
Total proceeds = $1,230.77 * 7,000 = $8,615,385

Now, let's calculate the allocation of issuance costs:

4. Allocate issuance costs per bond:
Issuance costs per bond = Total issuance costs / Number of bonds issued
Issuance costs per bond = $250,000 / 7,000 = $35.71

With these calculations, we can record the journal entry for the bond issuance:

Date: January 20

Debit: Cash ($8,615,385)
Credit: Bonds Payable ($7,000,000)
Credit: Premium on Bonds Payable ($615,385)
Credit: Bond Issuance Costs ($250,000)

The Cash account is debited for the total proceeds from the bond issuance ($8,615,385). The Bonds Payable account is credited for the par value of the bonds ($1,000 per bond * 7,000 bonds = $7,000,000). The Premium on Bonds Payable account is credited for the excess of the total proceeds over the par value ($8,615,385 - $7,000,000 = $615,385). The Bond Issuance Costs account is credited for the issuance costs per bond * number of bonds issued ($35.71 * 7,000 = $250,000).

Remember to round the amounts to the nearest dollar.