Brief Exercise 14-6 On January 1, 2017, Concord Corporation issued $690,000 of 9

Question

Brief Exercise 14-6 On January 1, 2017, Concord 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. Concord 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. 1.2S 1247 and final answer to O decimal places, e.g. 38,S48. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account tities are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit (a) Jan. 1, 2017

Explanation / Answer

Solution :

Journal Entries - Concord Corporation Date Particulars Debit Credit 1-Jan-17 Cash Dr $647,006.00 Discount on issue of bond Dr $42,994.00               To Bond Payable $690,000.00 (To record issue of bond at discount) 1-Jul-17 Interest Expense Dr $32,350.00               To Discount on issue of bond $1,300.00               To Cash $31,050.00 (Being semiannual interest paid and discount amortized) 31-Dec-17 Interest Expense Dr [($647,006 +$1,300) * 5%] $32,415.00               To Discount on issue of bond $1,365.00               To Interest payable $31,050.00 (Being semiannual interest accrued and discount amortized)

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