Problem:
Seymour Group issed $4,000,000 of 15 year 8% stated rate bonds on July 1, 2014 to yield 10%, which is similar to the current market rate for bonds of similar riskiness. The bonds are semi-annual and the first interest payment is December 31, 2014.
Required:
Question 1: Prepare the journal entry for the bond issuance by Seymour on July 1, 2014.
Question 2: Prepare the December 31, 2014 interest payment journal entry for Seymour using the effective interest method.
Question 3: Provide the balance sheet carrying amount and presentation for the bonds on December 31, 2015 by Seymour.
Note: Please show how you came up with the solution.