Question

IFRS 14-3

On January 1, 2017, Concord Corporation issued $510,000 of 6% bonds, due in 10 years. The bonds were issued for $473,758, and pay interest each July 1 and January 1.

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 7%.

Answer 1

Journal entry

Date	account and explanation	debit	credit
jan 1	Cash	473758
	Discount on bonds payable	36242
	Bonds payable		510000
	(To record bond issue)
July 1	Interest expense (473758*3.5%)	16582
	Discount on bonds payable		1282
	Cash (510000*6%*6/12)		15300
	(To record interest payment)
Dec 31	Interest expense (475040*3.5%)	16626
	Discount on bonds payable		1326
	Interest payable		15300
	(To record interest)