Homework SourseBrief Exercise 146 On January 1 2017 Martinez Corporation is
Brief Exercise 14-6 On January 1, 2017, Martinez Corporation issued $620,000 of 9% bonds, due in 8 years. The bonds were issued for $586,402, and pay interest each July 1 and January 1. Martinez 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. 1.251247 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 0 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, 2017 (b) Jan. 1, 2017July 1, 2017Dec. 31, 2017 (c) Jan. 1, 2017July 1, 2017Dec. 31, 2017
Solution
Journal entry :
| Date | accounts & explanation | debit | credit |
| 2017 jan 1 | Cash a/c | 586402 | |
| Discount on bonds payable | 33598 | ||
| Bonds payable | 620000 | ||
| (To record issuance of bonds payable) | |||
| 2017 July 1 | Interest expenses a/c (586402*10%*6/12) | 29320 | |
| Amortization of discount on bonds payable | 1420 | ||
| Cash a/c (620000*9%*6/12) | 27900 | ||
| (To record interest paid) | |||
| 2017, Dec 31 | Interest expenses a/c (586402+1420)*10%*6/12 | 29391 | |
| Amortization of discount of bonds payable | 1491 | ||
| Interest payable | 27900 | ||
| (To record interest payable) | |||
