On January 1, 2025, Larkspur Corporation issued $560,000 of 7% bonds, due in 10 years. The bonds were issued for $521,947, and pay interest each July 1 and January 1. Larkspur 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 answers 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 the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Date 1.2025 1,2025 31,2025 cash Discount on Bonds Payable Bonds Payable Interest Expense Discount on Bonds Payable Cash Interest Expense Discount on Bonds Payable Interest Payable Debit 521947 38053 Credit COLLE 560000 19600

On January 1, 2025, Larkspur Corporation issued $560,000 of 7% bonds, due in 10 years. The bonds were issued for $521,947, and pay interest each July 1 and January 1. Larkspur 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 answers 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 the amount is entered. Do not indent manually. List all debit entries before credit entries.) Account Titles and Explanation Date 1.2025 1,2025 31,2025 cash Discount on Bonds Payable Bonds Payable Interest Expense Discount on Bonds Payable Cash Interest Expense Discount on Bonds Payable Interest Payable Debit 521947 38053 Credit COLLE 560000 19600

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter9: Long-term Liabilities

Section: Chapter Questions

Problem 7MCQ

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