Reference no: EM133060441
Question - In each of the following independent cases, the company closes its books on December 31.
(a) Sheridan Co. sells $ 495,000 of 10% bonds on March 1, 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. Give entries through December 31, 2021.
Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end.
Prepare all of the relevant journal entries from the time of sale until December 31, 2021. (Assume that no reversing entries were made.)
(b) Skysong Co. sells $ 430,000 of 12% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2024. The bonds yield 10%. On October 1, 2021, Skysong buys back $ 141,900 worth of bonds for $ 149,900 (includes accrued interest). Give entries through December 1, 2022.
Prepare a bond amortization schedule using the effective-interest method for discount and premium amortization. Amortize premium or discount on interest dates and at year-end.
Prepare all of the relevant journal entries from the time of sale until December 31, 2022. (Assume that no reversing entries were made.)