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Stellar Corporation issued $550,000 of 7% bonds on November 1, 2017, for $584,545. The bonds were...

Stellar Corporation issued $550,000 of 7% bonds on November 1, 2017, for $584,545. The bonds were dated November 1, 2017, and mature in 8 years, with interest payable each May 1 and November 1. Stellar uses the effective-interest method with an effective rate of 6%.

Record Journal entries for issuance on November 1 and

Record Jorunal entries for December 31, 2017, adjusting entry.

Record Journal entries for interest payable each May 1 2018

Please show calucation

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Homework Answers

Answer #1

Journal entry :

Date accounts & explanation debit credit
Nov 1 Cash 584545
Bonds payable 550000
Premium on bonds payable 34545
(To record issue bonds payable)
Dec 31 Interest expense (584545*6%*2/12) 5845.45
Premium on bonds payable 571.22
Interest payable (550000*7%*2/12) 6416.67
(To record adjusting entry )
2018 may 1 Interest expense (584545-571.22)*6%*4/12 11679.48
Interest payable 6416.67
Premium on bonds payable 1153.85
Cash (550000*7%*6/12) 19250
(To record interest paid)
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