Question

On January 1, 2017, Coronado Corporation issued $650,000 of 9% bonds, due in 10 years. The bonds were issued for $609,499, and pay interest each July 1 and January 1. Coronado 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 10%. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 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)	Jan. 1, 2017July 1, 2017Dec. 31, 2017
(c)	Jan. 1, 2017July 1, 2017Dec. 31, 2017

Answer 1

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 10%. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 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	Cash	609499
		Discount on bonds payable	40501
		Bonds payable		650000
(b)	July 1, 2017	Interest expense (609499*10%*6/12)	30475
		Discount on bonds payable		1225
		Cash (650000*9%*6/12)		29250
(c)	Dec. 31, 2017	Interest expense (610724*5%)	30536
		Discount on bonds payable		1286
		Interest payable		29250