Question

Brief Exercise 14-7 On January 1, 2017, Oriole Corporation issued $660,000 of 9% bonds, due in 8 years. The bonds were issued for $698,454, and pay interest each July 1 and January 1. The effective-interest rate is 8%. 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. Oriole uses the effective interest method. (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) January 1, 2017 (b) July 1, 2017 (c) December 31, 2017

Answer 1

No.	Date	Account Titles and Explanation	Debit	Credit
(a)	January 1, 2017	Cash	$698,454
		Bonds premium		$38,454
		Bonds payable		$660,000
(b)	July 1, 2017	Interest expense ($698,454*4%)	$27,938
		Bonds premium	$1,762
		Cash ($660,000*4.5%)		$29,700
(c)	December 31, 2017	Interest expense [($698,454-$1,762)*4%]	$27,868
		Bonds premium	$1,832
		Cash ($660,000*4.5%)		$29,700