# Exercise 14-9 On June 30, 2017, Vaughn Company issued $4,500,000 face value of 13%, 20-year bonds... ###### Question: Exercise 14-9 On June 30, 2017, Vaughn Company issued$4,500,000 face value of 13%, 20-year bonds at $4,838,533, a yield of 12%. Vaughn uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. Prepare the journal entries to record the following transactions. (Round answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)  (1) The issuance of the bonds on June 30, 2017. (2) The payment of interest and the amortization of the premium on December 31, 2017. (3) The payment of interest and the amortization of the premium on June 30, 2018. (4) The payment of interest and the amortization of the premium on December 31, 2018.  No. Date Account Titles and Explanation Debit Credit (1) June 30, 2017 (2) December 31, 2017 (3) June 30, 2018 (4) December 31, 2018  SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet. (Round answers to 0 decimal places, e.g. 38,548.)  Vaughn Company Balance Sheet December 31, 2018For the Year Ended December 31, 2018For the Quarter Ended December 31, 2018 Current AssetsCurrent LiabilitiesIntangible AssetsLong-term InvestmentsLong-term LiabilitiesProperty, Plant and EquipmentStockholders' EquityTotal AssetsTotal Current AssetsTotal Current LiabilitiesTotal Intangible AssetsTotal LiabilitiesTotal Liabilities and Stockholders' EquityTotal Long-term InvestmentsTotal Long-term LiabilitiesTotal Property, Plant and EquipmentTotal Stockholders' Equity$ Interest ExpensePremium on Bonds PayableBook Value of Bonds PayableDiscount on Notes PayableInterest PayableCashLoss on Redemption of BondsNotes PayableNotes ReceivableBad Debt Expense $ SHOW LIST OF ACCOUNTS SHOW SOLUTION LINK TO TEXT Provide the answers to the following questions. (1) What amount of interest expense is reported for 2018? (Round answer to 0 decimal places, e.g. 38,548.)  Interest expense reported for 2018$

(2) Will the bond interest expense reported in 2018 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used?
 The bond interest expense reported in 2018 will be greater thanless thansame as the amount that would be reported if the straight-line method of amortization were used.

(3) Determine the total cost of borrowing over the life of the bond. (Round answer to 0 decimal places, e.g. 38,548.)
 Total cost of borrowing over the life of the bond \$

(4) Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used?
 The total bond interest expense for the life of the bond will be greater thanless thanthe same as the total interest expense if the straight-line method of amortization were used.

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