Question

On January 1, 2020, Carla Corporation issued $660,000 of 9% bonds, due in 8 years. The bonds were issued for $698,454, 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. Carla 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 Cred (a) (b) > (c)

Answer 1

Date	Account Title and Explanation		Debit	Credit
Jan 1	Cash		698454
	Premium on Bonds			38454
	Bonds Payable			660000
	(To record the bonds issuance)
Jul 1	Interest Exp	698454*8%/2	27938
	Premium on Bonds		1762
	Cash	660000*9%/2		29700
	(To record Interest Payment)
Dec 31	Interest Exp	(698454-1762)*8%/2	27868
	Premium on Bonds		1832
	Interest Payable			29700
	(To record the adjusting entry)