Question

On January 1, 2017, Skysong Corporation issued $650,000 of 9% bonds, due in 10 years. The bonds were issued for $694,171, 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. Skysong uses the effective-interest method. (Round intermediate calculations to 6 decimal places, eg. 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 Ofor the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Date January 1, 2017 (a) (b) July 1, 2017 (c) December 31, 2017

Answer 1

Date	Accounts and explanation	Debit(in $)	Credit(in $)
Jan 1,2017	Cash	$                      694,171
	Bond Payable		$                     650,000
	Premium on Bond Payable		$                       44,171
Jul 1,2017	Interest expense($694,171*8%*6/12)	$                        27,767
	Premium on Bond Payable	$                          1,483
	Cash($650,000*9%*6/12)		$                       29,250
Dec 31,2017	Interest expense[($694,171-$1,483)*8%*6/12]	$                        27,708
	Premium on Bond Payable	$                          1,542
	Interest Payable($650,000*9%*6/12)		$                       29,250