On January 1,2011, JWS Corporation issued $770,000 of 7%bonds, due in 10 years.
ID: 2434124 • Letter: O
Question
On January 1,2011, JWS Corporation issued $770,000 of 7%bonds, due in 10 years. The bonds were issued for $717,679, and payinterest each July 1 and January 1. JWS uses the effective interestmethod. Prepare the company's journal entries for (a) the January 1issuance, (b) the July 1 interest payment, and (c) the December 31adjusting entry. Assume an effective interest rate of 8%. On January 1,2011, JWS Corporation issued $770,000 of 7%bonds, due in 10 years. The bonds were issued for $717,679, and payinterest each July 1 and January 1. JWS uses the effective interestmethod. Prepare the company's journal entries for (a) the January 1issuance, (b) the July 1 interest payment, and (c) the December 31adjusting entry. Assume an effective interest rate of 8%.Explanation / Answer
Jul01 InterestExpense 28,707 Discount on BondsPayable 1,757 Cash 26,950 Dec 31 Interest Expense 28,777 Discount on BondsPayable 1,827 Interest Payable 26,950