Brief Exercise 14-7

On January 1, 2017, Indigo Corporation issued $620,000 of 9% bonds, due in 8 years. The bonds were issued for $656,123, and pay interest each July 1 and January 1. The effective-interest rate is 8%. Prepare the companys journal entries for (a) the January 1 issuance, (b) the July 1 interest payment, and (c) the December 31 adjusting entry. Indigo uses the effective-interest method. (Round intermediate calculations to 6 decimal places, e.g. 1.251247 and final answer to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Accumulated Depreciation-Equipment Accumulated Depreciation-Machinery Allowance for Doubtful Accounts Bad Debt Expense Bond Issue Expense Bonds Payable Buildings Cash Common Stock Debt Investments Depreciation Expense Discount on Bonds Payable Discount on Notes Payable Discount on Notes Receivable Equipment Equity Investments Gain on Disposal of Machinery Gain on Disposal of Land Gain on Disposal of Plant Assets Gain on Redemption of Bonds Gain on Restructuring of Debt Gain on Sale of Machinery Interest Expense Interest Payable Interest Receivable Interest Revenue Land Loss on Disposal of Land Loss on Redemption of Bonds Machinery Mortgage Payable No Entry Notes Payable Notes Receivable Paid-in Capital in Excess of Par - Common Stock Paid-in Capital in Excess of Par - Preferred Stock Premium on Bonds Payable Sales Revenue Unamortized Bond Issue Costs Unearned Revenue Unearned Sales Revenue Unrealized Holding Gain or Loss - Income