Analyzing and Reporting Financial Statement Effects of Bond Transactions

On January 1, 2019, Hutton Corp. issued $300,000 of 15-year, 11% bonds payable for $377,814, yielding an effective interest rate of 8%. Interest is payable semiannually on June 30 and December 31.

Required a. Show computations to confirm the issue price of $377,814. b. Prepare journal entries to record the bond issuance, semiannual interest payment and premium amortization on June 30, 2019, and semiannual interest payment and premium amortization on December 31, 2019. Use the effective interest rate method. c. Post the journal entries from part b to their respective T-accounts. d. Record each of the transactions from part b in the financial statement effects template.

• Bond Computation
• Journal Entries
• T-Accounts
• Financial Statement Effects Template

Note: Use negative signs with your answers, when appropriate. For the first transaction, only use the second row if additional answers fields are needed. Otherwise enter answers using the first row.

	Balance Sheet	Income Statement
Transaction	Cash Asset	+	Noncash Asset	=	Liabilities	+	Contrib. Capital	+	Earned Capital	Revenues	-	Expenses	=	Net Income
1/1/19 Issue bonds at a premium	Answer	+	Answer	=	300,000	+	Answer	+	Answer	Answer	-	Answer	=	Answer
	Answer	+	Answer	=	Answer	+	Answer	+	Answer	Answer	-	Answer	=	Answer
6/30/19 Interest payment on bonds	Answer	+	Answer	=	Answer	+	Answer	+	Answer	Answer	-	Answer	=	Answer
12/31/19 Interest payment on bonds	Answer	+	Answer	=	Answer	+	Answer	+	Answer	Answer	-	Answer	=	Answer