Question

On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $470,000 and a coupon interest rate of 6%, with interest payable semi-annually. Assume that the company has a December 31 year end and records adjusting entries annually. Your answer is partially correct. Try again. Record the journal entries relating to the bonds on January 1, July 1, and December 31, assuming that when the bonds were sold, the market interest rate was 5%. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to o decimal places, e.g. 5,275.) Date Account Titles and Explanation Debit Credit Jan. 1 Cash 490568 | Bonds Payable 490568 July 1 Bonds Payable 12264 Interest Expense 1836 Cash 14100 Dec. 31 Bonds Payable 12218 Interest Expense 1882 Interest Payable 14100

Answer 1

1
		Debit	Credit
Jan 1	Cash	490568
	Bonds payable		490568
July 1	Bonds payable	1836
	Interest expense	12264		=490568*5%/2
	Cash		14100	=470000*6%/2
Dec 31	Bonds payable	1882
	Interest expense	12218		=(490568-1836)*5%/2
	Interest payable		14100	=470000*6%/2
2
		Debit	Credit
Jan 1	Cash	450457
	Bonds payable		450457
July 1	Interest expense	15766		=450457*7%/2
	Cash		14100	=470000*6%/2
	Bonds payable		1666
Dec 31	Interest expense	15824		=(450457+1666)*7%/2
	Bonds payable		1724
	Interest payable		14100	=470000*6%/2