Question

Assignment Gradebook ORION Downloadable eTextbook CALCULATOR FULL SCREEN PRINTER VERSION BACK Brief Exercise 14-07 On January 1, 2020, Sunland Corporation issued $550,000 of 7% bonds, due in 8 years. The bonds were issued for $584,545, and pay interest each July 1 and Juary 1. The effective interest rate is 6% Prepare the company's journal entries for (a) the January 1 Issuance, (b) the July 1 Interest payment, and (c) the December 31 adjusting entry. Surland uses the effective interest method. (Round intermediate calculations to decimal places ep. 1.251247 and final answer too decimal places, e 38,548. If no entry is required, select "No Entry for the account titles and enter for the amount Credit accou tities are automatically indented when amount is entered. Do not indent manually.) No Date Account Titles and Explanation Credit (a) (0) mmand command option

Answer 1

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	Jan 1	Cash	$584,545
		Bonds Payable		$550,000
		Premium on Bonds Payable		$34,545
(b)	July 1	Interest Expense	$17,536		($584,545 x 6% x 1/2)
		Premium on Bonds Payable	$1,714
		Cash		$19,250	($550,000 x 7% x 1/2)
(c)	Dec 31	Interest Expense	$17,485		[($584,545 - $1,714) x 6% x 1/2]
		Premium on Bonds Payable	$1,765
		Cash		$19,250	($550,000 x 7% x 1/2)