Headland Corporation issued $510,000 of 7% bonds on November 1, 2017, for $542,0
ID: 2541012 • Letter: H
Question
Headland Corporation issued $510,000 of 7% bonds on November 1, 2017, for $542,033. The bonds were dated November 1, 2017, and mature in 8 years, with interest payable each May 1 and November 1. Headland uses the effective-interest method with an effective rate of 6%.
Prepare Headland’s December 31, 2017, adjusting entry. (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.)
Date
Account Titles and Explanation
Debit
Credit
December 31, 2017
Date
Account Titles and Explanation
Debit
Credit
December 31, 2017
Explanation / Answer
Date Account Titles and Explanation Debit Credit December 31, 2017 Interest expense($542,033 × 6% × 2/12) $5,420 Premium on bonds payable $530 Interest payable($510,000 × 7% × 2/12) $5,950
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