Analyzing and Reporting Financial Statement Effects of Bond Transactions

On January 1, 2016, Hutton Corp. issued $350,000 of 15-year, 13% bonds payable for $374,089, yielding an effective interest rate of 12%. Interest is payable semiannually on June 30 and December 31.

Required a. Show computations to confirm the issue price of $374,089. b. Prepare journal entries to record the bond issuance, semiannual interest payment and premium amortization on June 30, 2016, and semiannual interest payment and premium amortization on December 31, 2016. 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.