Question

Brief Exercise 14-6 On January 1, 2017, Sunland Corporation issued $480,000 of 7% bonds, due in 10 years. The bonds were issued for $447,385, and pay interest each July 1 and January 1. Sunland uses the effective-interest method. 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. Assume an effective-interest rate of 8%. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to O 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.) No. Date Account Titles and Explanation Debit Credit (a) Jan. 1, 2017 (b)

Answer 1

Journal entry

No	Date	account and explanation	Debit	Credit
1	Jan 1	Cash	447385
		Discount on bonds payable	32615
		Bonds payable		480000
2	July 1	Interest expense	17895
		Discount on bonds payable		1095
		Cash (480000*7%*6/12)		16800
3	Dec 31	Interest expense	17939
		Discount on bonds payable		1139
		Interest payable		16800