Brief Exercise 14-6 On January 1, 2017, Kingbird Corporation issued $470,000 of

Question

Brief Exercise 14-6 On January 1, 2017, Kingbird Corporation issued $470,000 of 7% bonds, due in 8 years. The bonds were issued for $442,618, and pay interest each July 1 and January 1 Kingbird 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 8%. (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 O 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, 2017Cash 442618 Discount on Bonds Payable 27382 Bonds Payable 470000 (b) July 1, 2017 Interest Expense (C) Dec. 31, 2017 # Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Journal entries :

Date accounts & explanation debit credit Jan 1,2017 Cash 442618 Discount on bonds payable 27382 Bonds payable 470000 July 1,2017 Interest expenses a/c (442618*8%*6/12) 17705 Amortization on discount on bonds payable 1255 Cash (470000*7%*6/12) 16450 Dec 31,2017 Interest expenses a/c (442618+1255*8%*6/12) 17755   Amortization on discount on bonds payable 1305 Interest payable a/c 16450

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