Question

Brief Exercise 14-06 On January 1, 2020, Oriole Corporation issued $500,000 of 7% bonds, due in 10 years. The bonds were issued for $466,026, and pay interest each July 1 and January 1. Oriole 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 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter o 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 (c) Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answers

--Journal entries

Date	Accounts title	Debit	Credit
01-Jan-20	Cash	$466,026
	Discount on Bonds Payable	$33,974
	Bonds Payable		$500,000
	(to record issuance)
01-Jul-20	Interest Expense ($466026 x 8% x 6/12)	$18,641
	Discount on Bonds Payable		$1,141
	Cash ($500000 x 7% x 6/12)		$17,500
	(to record interest payment)
31-Dec-20	Interest Expense [($466026+1141) x 8% x 6/12)	$18,687
	Discount on Bonds Payable		$1,187
	Interest Payable ($500000 x 7% x 6/12)		$17,500
	(to record adjustment of interest accrued)