On January 1, 2014, JWS Corporation issued $613,000 of 7% bonds, due in 8 years.

Question

On January 1, 2014, JWS Corporation issued $613,000 of 7% bonds, due in 8 years. The bonds were issued for $577,287, and pay interest each July 1 and January 1. JWS uses the effective-interest method. Prepare the company's journal entries for the January 1 issuance, the July 1 interest payment, and the December 31 adjusting entry. Assume an effective-interest rate of 8%. (Round answers 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.)

Explanation / Answer

Jan 1,2014 (a) Cash a/c                                           Dr.         577287 Discount on bonds payable a/c    Dr. 35713                       To Bonds Payable a/c 613000 July 1, 2014 (b) Interest Expense                              Dr. 24520                       To Interest Payable a/c 3065                       To Cash a/c 21455 Dec 31,2014 ( c ) Interest Expense                              Dr. 24520                       To Interest Payable a/c 3065                       To Cash a/c 21455

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