Question

Brief Exercise 14-6 On January 1, 2017, Whispering Corporation issued $500,000 of 7% bonds, due in 10 years. The bonds were issued for $466,026, and pay interest each July 1 and January 1. Whispering 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 8%. (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

Ans. (a) The january 1 issuance

DATE	ACCOUNT TITAL	DEBIT	CREDIT
Jan 1	Cash	466026
	Discount on Bonds Payable	33974
	To Bonds Payable		500000
	(Being Bond issue of $500000)

Ans. (b) the july 1 intrest payment

DATE	ACCOUNT TITAL	DEBIT	CREDIT
1 July	Intrest Expenses	18641
	To Cash		17500
	To Discount on Bond Payable		1141

Ans (c) Adjusting Entry

DATE	ACCOUNT TITAL	DEBIT	CREDIT
Dec.31	Intrest Expenses	18687
	To Intrest Payable		17500
	To Discount on Bonds payable		1187