Analyzing and Reporting Financial Statement Effects of Bond Transactions

On January 1, Hutton Corp. issued $400,000 of 15-year, 11% bonds payable for $503,753, yielding an effective interest rate of 8%. Interest is payable semiannually on June 30 and December 31.

a. Prepare journal entries to record the bond issuance, semiannual interest payment, and premium amortization on June 30, and semiannual interest payment and premium amortization on December 31. Use the effective interest rate method.

Note: Carry all decimals in calculations; round the final answer to the nearest dollar.

b. Post the journal entries to their respective T-accounts. Note: Enter your answers, in transaction order, in the first open field of the appropriate column in each account.