Atlantis Inc produces and sells voltage regulators On July

1
Atlantis Inc. produces and sells voltage regulators. On July 1, 2007, Atlantis Inc. issued
$800,000 of 10-year, 14% bonds at an effective interest rate of 13%. Interest on the bonds is
payable semiannually on December 31 and June 30. The fiscal year of the company is the
calendar year.Instructions1. Journalize the entry to record the amount of the cash proceeds
from the sale of the bonds. Use the tables of present values in Appendix A to compute the cash
proceeds, rounding to the nearest dollar.2. Journalize the entries to record the following:a. The
first semiannual interest payment on December 31, 2007, including the amortization of the bond
premium, using the straight-line method. (Round to the nearest dollar.)b. The interest payment
on June 30, 2008, and the amortization of the bond premium, using the straight-line method.
(Round to the nearest dollar.)3. Determine the total interest expense for 2007.4. Will the bond
proceeds always be greater than the face amount of the bonds when the contract rate is greater
than the market rate of interest? Explain.View Solution:
Atlantis Inc produces and sells voltage regulators On July 1
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regulators-on-july-1/

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