Yacuma Corporation issued bonds twice during 2014 The

transactions follow
Yacuma Corporation issued bonds twice during 2014. The transactions follow.2014Jan. 1
Issued $2,000,000 of 9.2 percent, 10-year bonds dated January 1, 2014, with interest payable
on June 30 and December 31. The bonds were sold at 98.1, resulting in an effective interest
rate of 9.5 percent.Apr. 1 Issued $4,000,000 of 9.8 percent, 10-year bonds dated April 1, 2014,
with interest payable on March 31 and September 30. The bonds were sold at 101, resulting in
an effective interest rate of 9.5 percent.June 30 Paid semiannual interest on the January 1 issue
and amortized the discount, using the effective interest method.Sept. 30 Paid semiannual
interest on the April 1 issue and amortized the premium, using the effective interest
method.Dec. 31 Paid semiannual interest on the January 1 issue and amortized the discount,
using the effective interest method.31 Made an end-of-year adjusting entry to accrue interest on
the April 1 issue and to amortize half the premium applicable to the second interest
period.2015Mar. 31 Paid semiannual interest on the April 1 issue and amortized the premium
applicable to the second half of the second interest period.Required1. Prepare the journal
entries to record the bond transactions. (Round to the nearest dollar.)2. Describe the effect of
the above transactions on profitability and liquidity by answering the following questions:a. What
is the total interest expense in 2014 for each of the bond issues?b. What is the total cash paid in
2014 for each of the bond issues?c. What differences, if any, do you observe, and how do you
explain them?View Solution:
Yacuma Corporation issued bonds twice during 2014 The transactions follow
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