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Qix Corporation issued bonds: Prepare journal entries for is

On Jan. 1, 2009, Qix Corp. issued $477,000 of 7% bonds, due in 10 years. The bonds were issued for $444,589, and pay interest each July 1 and Jan 1. Qix uses the effective interest method.

Prepare the company's journal entries for
(a) the Jan 1 issuance,
(b) the July 1 interest payment, and
(c) the Dec 31 adjusting entry.

Assume an effective interest rate of 8%. (Round answer to 0 decimal places, i.e. 12,354. List multiple debit/credit entries in of magnitude.) Please show interest calculations for journal entries.

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Solution Preview

See Excel attached. Click in cells to see computation.

The journal entries are based on the bond amortization ...

Solution Summary

The journal entries are based on the bond amortization schedule. See the Excel spreadsheet where I show you how to construct this. Each column has a note telling you what belongs in that column. Click in each cell to see the computation. The entries are then created by pointing at the relevant amount in the amortization schedule. This is a template that you can now use for any bond problem.