Question

{ Homework Chapter 14 Question 5 of 5 - /1 View Policies Current Attempt in Progress On January 1, 2020, Blue Corporation issued $700,000 of 9% bonds, due in 8 years. The bonds were issued for $740,784, 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. Blue uses the effective-interest method. (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 Credi (a) (b) (c)

Answer 1

* Journal entries Particulare Debit) Credilo 200 Jona $740,784 $ 700,0C6 $ 40,784 Cash All - Dr To Gl. Bonds the To premium on Bonds A (Bring premium on bonds dice) July enterest Exp All - Dr $91,631 $ 1869 $3,500 Premium on Bonds Alc - Dr TO Cash Ale (Buig gemi- Annual aut. paid) der, 3) Zuterest Expenses Alc- by $29,557 Premium on bonds All - Dr $1943 To sash Alo Enterest Payable All $31,500

Siguly Interest Amart on the basis of balayag value (semi- Annual) Coupon Rate $ 700.000 x 9% X 6112 $31,500 Interest Amount on the basis of Carring value of bond (Semi- Annual) $ 740, 784 x 8.). x6/12 $ 99,631. = $1869 difference in couponvalue and Earling value is premium amortisations zist dec Caring value of bond aftes ist semi- Annual interest Paid $740,784 x - $1869 $ 738,915 Interest for Next half $738.915x8% X612 $29,557 Bond Premium - $ 1943. ef any clasification Heay Com merit . ., Hoffy HomeworkLibing
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