On January 1, 2017, Bramble Corporation issued $670,000 of 9% bonds, due in 10 y
ID: 2596333 • Letter: O
Question
On January 1, 2017, Bramble Corporation issued $670,000 of 9% bonds, due in 10 years. The bonds were issued for $628,252, and pay interest each July 1 and January 1. Bramble 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 10%. (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.)
No.
Date
Account Titles and Explanation
Debit
Credit
Jan. 1, 2017
No.
Date
Account Titles and Explanation
Debit
Credit
(a)Jan. 1, 2017
(b)Jan. 1, 2017July 1, 2017Dec. 31, 2017
(c)Jan. 1, 2017July 1, 2017Dec. 31, 2017
Explanation / Answer
Jan-01 Cash 628252 Discount on bonds payable 41748 Bonds payable 670000 Jul-01 Interest expense 31413 =628252*10%/2 Discount on bonds payable 1263 Cash 30150 =670000*9%/2 Dec-31 Interest expense 31476 =(628252+1263)*10%/2 Discount on bonds payable 1326 Interest payable 30150
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