E10-23 Hernandez $407,968. This price resulted in payable annually on January 1,

Question

E10-23 Hernandez $407,968. This price resulted in payable annually on January 1, Hernandez uses the effective-interest method to amortize interest, and amo Company issued $380.000.70 10-year bondson January 1. 2017, for Prapare journal en an effective-interest rate of6% on the bonds. Interest is issuance of bonds premium using e method. bond premium or discount. Instructions Prepare the journal entries (rounded to the nearest dollar) to record: (a) The issuance of the bonds. (b) The accrual of interest and the premium amortization on December 31, 2017. (c) The payment of interest on January 1, 2018. (LO 3, 6), AP

Explanation / Answer

Journal Entry Date Accounting titles & Explanations Debit Credit 1/1/2017 Cash 407,968 Premium on bonds payable 380,000 Bonds payable 27,968 12/31/2017 interest expense (407,968*6%) 24478 premium on bonds payable 2122 interest payable (380,000*7%) 26600 1/1/2018 interest payable 26,600 cash 26,600

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