The Gorman Group issued $880,000 of 13% bonds on June 30, 2018, for $946,202. The bonds were dated on June 30 and mature on June 30, 2038 (20 years). The market yield for bonds of similar risk and maturity is 12%. Interest is paid semiannually on December 31 and June 30. Required:
Record the company's journal entry.

Missing word: "a. to record their issuance by The Gorman Group on June 30, 2018, b. interest on December 31, 2018 and c. interest on June 30, 2019 (at the effective rate)."

Par value of bonds = $880,000

Semi annual interest payment = 880,000 x 13% x 6/12  = $57,200

Effective interest rate = 12%, Semi annual Effective interest rate = 6%

Issue price of bonds =  $946,202

Premium on bonds payable = Issue price of bonds - Par value of bonds = $946,202 - $880,000 = $66,202

a. Journal Entry on June 30, 2018

Date              Account                          Debit        Credit

6/30/2016      Cash                           946,202  

                           Bonds payable                         880,000  

                            Premium on Bonds payable     66,202

b. Journal Entry on on December 31, 2018

Date              Account                                 Debit        Credit

12/31/2016     Interest expense                   56,772

                    (946,202 x 6%)

                    Premium on bonds payable   428

                    (57,200 - 56,772)

                               Cash                                               57,200

c. Journal Entry on on June 30, 2019

Date              Account                                 Debit        Credit

6/30/2019    Interest expense                   56,746

                    (945,774 x 6%)

                    Premium on bonds payable   428

                    (57,200 - 56,746)

                               Cash                                               57,200

answer; erp systems;