Question

On January 1, 2020, Pronghorn Corporation issued $610,000 of 9% bonds, due in 10 years. The bonds were issued for $651,453, 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. Pronghorn 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 Ofor the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit 1. 1. 2020 Cash 651,453 Premium on Bonds Payable 41,453 Bonds Payable 610.000 y 1, 2020 Interest Expense 26,058 Premium on Bonds Payable 1392 Cash 27,450 c. 31, 2020 Interest Expense 26,113 Premium on Bonds Payable 1,337 Interest Payable 27,450 e Textbook and Media

Answer 1

Date	Account Titles and Explanation	Debit	Credit
Jan.1,2020	Cash	651453
	Premium on Bonds payable		41453
	Bonds payable		610000
July 1,2020	Interest expense	26058		=651453*8%*6/12
	Premium on Bonds payable	1392
	Cash		27450	=610000*9%*6/12
Dec 31,2020	Interest expense	26002		=(651453-1392)*8%*6/12
	Premium on Bonds payable	1448
	Interest payable		27450