Question

Carlyle Corporation had the following bond transactions during the fiscal year 2017:

On January 1: issued ten $10,000 bonds at 101. The 5-year bonds are dated January 1, 2017. The contract interest rate is 5%. Straight-line amortization method is used. Interest is payable semi-annual on January 1 and July 1.

On July 1: Carlyle Corporation issued $500,000 of 10%, 10-year bonds. The bonds dated January 1, 2017 were issued at 88, and pay interest on July 1 and January 1. Effective interest rate for these bonds is 10%. Straight-line amortization method is used.

On October 1: issued 10-year bonds $10,000 face value bonds, for $10,985 cash. The bonds have a stated rate of 7%. Straight-line amortization method is used. Interest is payable on October 1 and April 1. general journal entries for the three bonds issued and any interest accruals and payments for the fiscal year 2017. (Round all calculations to nearest whole dollar.)

Answer 1

Journal entries:
Date	Accounts title and explanations					Debit $	Credit $
1-Jan	Cash account Dr.					10100
	Bonds payable						10000
	Premium on Bonds payable						100
1-Jul	Interest expense Dr.					240
	Premium on Bonds payable Dr. (100/10)					10
	Cash account (10000*5%*6/12)						250
1-Jul	Cash account Dr. (500000*88%)					440000
	Discount on bonds payable Dr.					60000
	Bonds payable						500000
1-Oct	Cash account Dr.					10985
	Bonds payable						10000
	Premium n bonds payable						985
31-Dec	Interest expense Dr.					240
	Premium on Bonds payable Dr. (100/10)					10
	Interest payable						250
31-Dec	Interest expenses Dr.					28000
	Interest payable (500000*10%*6/12)						25000
	Discount on bonds payable (60000/20)						3000
31-Dec	Interest expenses					150.375
	Premium on bonds payable Dr. (985/20*1/2)					24.625
	Interest payable (10000*7%*3/12)						175