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USE EFFECTIVE INTEREST METHOD On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $480,000 and a coupon interest rate of

USE EFFECTIVE INTEREST METHOD

On January 1, 2018, Carvel Corp. issued five-year bonds with a face value of $480,000 and a coupon interest rate of 6%, with interest payable semi-annually. Assume that the company has a December 31 year end and records adjusting entries annually.

Record the journal entries relating to the bonds on January 1, July 1, and December 31, assuming that when the bonds were sold, the market interest rate was 5%. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

July 1

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

Dec. 31

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

Record the journal entries relating to the bonds on January 1, July 1, and December 31, assuming that when the bonds were sold, the market interest rate was 6%. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

July 1

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

Dec. 31

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

Record the journal entries relating to the bonds on January 1, July 1, and December 31, assuming that when the bonds were sold, the market interest rate was 7%. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Round answers to 0 decimal places, e.g. 5,275.)

Date

Account Titles and Explanation

Debit

Credit

Jan. 1

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on January 1

enter a debit amount

enter a credit amount

July 1

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

enter an account title for the journal entry on July 1

enter a debit amount

enter a credit amount

Dec. 31

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

enter an account title for the journal entry on December 31

enter a debit amount

enter a credit amount

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