## Journal Entries for Bond Interest Using Effective Interest Method**Scenario:**On January 1, 2018, Cenotaph Company purchased 8% bonds for $17.4 million. These bonds, dated January 1, 2018, have a face amount of $19.4 million. The market yield for bonds of similar risk and maturity is 10%. Interest is paid semiannually on June 30 and December 31.**Required Tasks:**1. Prepare the journal entry for interest on June 30, 2018, using the effective interest method.2. Prepare the journal entry for interest on December 31, 2018, using the effective interest method.**Instructions:**Complete this task by entering your answers in the designated tabs.### Required 1**Task:**Prepare the journal entry for interest on June 30, 2018, using the effective interest method.- If no entry is required, select "No journal entry required" in the first account field.- Enter all amounts in whole dollars.**Journal Entry Worksheet:**- **Date:** June 30, 2018- **Instructions:** Record the interest entry using the effective interest method. Enter debits before credits.**Fields:**- Date- General Journal- Debit- CreditEnter the necessary journal entries accordingly.

Req-1 Date Account Titles & Explanation Debit Credit June 30, 2018 Cash…

Answered: On January 1, 2018, for $17.4 million,…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Req-1
Date	Account Titles & Explanation	Debit	Credit
June 30, 2018	Cash ($19400000 * 8% * 6 / 12)	$7,76,000
	Debt Investment / Discount on Bonds	$94,000
	Interest Revenue ($17400000 * 10% * 6 / 12)		$8,70,000
	(To record the receipt of semi annual interest)