Question

On January 1, 2017, Nash Corporation issued $690,000 of 9% bonds, due in 10 years. The bonds were issued for $647,006, and pay interest each July 1 and January 1. Nash 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
(a)	Jan. 1, 2017
(b)	Jan. 1, 2017July 1, 2017Dec. 31, 2017
(c)	Jan. 1, 2017July 1, 2017Dec. 31, 2017

Answer 1

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
(a)	Jan. 1, 2017	Cash	647006
		Discount on bonds payable	42994
		Bonds payable		690000
(b)	July 1, 2017	Interest expense (647006*10%*6/12)	32350
		Discount on bonds payable		1300
		Cash (690000*9%*6/12)		31050
c)	Dec 31,2017	Interest expense (648306*10%*6/12)	32415
		Discount on bonds payable		1365
		Interest payable		31050