On January 1,2011, JWS Corporation issued $770,000 of 7%bonds, due in 10 years.

Question

On January 1,2011, JWS Corporation issued $770,000 of 7%bonds, due in 10 years. The bonds were issued for $717,679, and payinterest each July 1 and January 1. JWS uses the effective interestmethod. Prepare the company's journal entries for (a) the January 1issuance, (b) the July 1 interest payment, and (c) the December 31adjusting entry. Assume an effective interest rate of 8%. On January 1,2011, JWS Corporation issued $770,000 of 7%bonds, due in 10 years. The bonds were issued for $717,679, and payinterest each July 1 and January 1. JWS uses the effective interestmethod. Prepare the company's journal entries for (a) the January 1issuance, (b) the July 1 interest payment, and (c) the December 31adjusting entry. Assume an effective interest rate of 8%.

Explanation / Answer

Jul01 InterestExpense 28,707 Discount on BondsPayable 1,757 Cash 26,950 Dec 31 Interest Expense 28,777 Discount on BondsPayable 1,827 Interest Payable 26,950

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