PREPARING JOURNAL ENTRIES
Legend Company uses the straight-line method foramortization of all bond premium & discounts. During fiscalyear 2018 Legend had the following bond payabletransactions:
January 2, issued ten, $1,000 bonds at 101. These 5-yearbonds are dated January 1, 2017. The contract interest rate is6%. Interest is payable semi-annual on January 1 andJuly 1.
July 1, Legend issued $400,000 of 10%, 10-yearbonds. The bonds are dated January 1, 2017 were issuedat 90, and pay interest on July 1 and January 1.
October 1, Legend issued 10-year bonds $10,000 facevalue bonds for $10,860 cash. The bonds have a stated rate of 8%.Interest is payable on October 1 and April 1.
Use this information to prepare GeneralJournal entries for the three bonds issued and anyinterest accruals and payments for the fiscal year 2018. (Round allcalculations to nearest whole dollar.)
