points eBook Hint References Check my work Check My Work button is now enabledItem 6 Item 6 0.5 points Exercise 14-11 Bonds; effective interest; adjusting entry [LO14-2] On February 1, 2018, Strauss-Lombardi issued 10% bonds, dated February 1, with a face amount of $930,000. The bonds sold for $855,382 and mature on January 31, 2038 (20 years). The market yield for bonds of similar risk and maturity was 11%. Interest is paid semiannually on July 31 and January 31. Strauss-Lombardi’s fiscal year ends December 31. Required: 1. to 4. Prepare the journal entry to record their issuance by Strauss-Lombardi on February 1, 2018, interest on July 31, 2018 (at the effective rate), adjusting entry to accrue interest on December 31, 2018 and interest on January 31, 2019. (Do not round your intermediate calculations and round your final answers to nearest whole dollar. If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)
Note: Enter debits before credits.
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Note: Enter debits before credits.
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Note: Enter debits before credits.
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Note: Enter debits before credits.
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1-Feb | Cash | 855382 | ||
Discount on bonds payable | 74618 | |||
Bonds payable | 930000 | |||
31-Jul | Interest expense | 47046 | =855382*11%/2 | |
Discount on bonds payable | 546 | |||
Cash | 46500 | =930000*10%/2 | ||
31-Dec | Interest expense | 39230 | =(855382+546)*11%/12*5 | |
Discount on bonds payable | 480 | |||
Interest payable | 38750 | =930000*10%/12*5 | ||
31-Jan | Interest expense | 7846 | =(855382+546)*11%/12*1 | |
Interest payable | 38750 | |||
Discount on bonds payable | 96 | |||
Cash | 46500 |
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