Question

Brief Exercise 14-6 On January 1, 2017, Ivanhoe Corporation issued $610,000 of 9% bonds, due in 10 years. The bonds were issued for $571,991, and pay interest each July 1 and January 1. Ivanhoe 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 10%. (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 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Answer 1

Date	Accounts	Debit	Credit
January 1, 2017	Cash	$571,991
	Discount on Bonds Payable	$28,009
	Bonds Payable		$610,000
July 1, 2017	Interest Expense (571991*10%*6/12)	$28,600
	Discount on Bonds Payable		$1,150
	Cash (610000*9%*6/12)		$27,450
Dec 31, 2017	Interest Expense	$28,600
	Discount on Bonds Payable		$1,150
	Interest Payable		$27,450