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Prepare all of the relevant journal entries

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Reference no: EM132000285

Problem - In each of the following independent cases the company closes its books on December 31.

1. Sanford Co. sells $512,300 of 8% bonds on March 1, 2014. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2017. The bonds yield 12%.

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 the date indicated. (Assume that no reversing entries were made.)

2. Titania Co. sells $412,000 of 12% bonds on June 1, 2014. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2018. The bonds yield 8%. On October 1, 2015, Titania buys back $127,000 worth of bonds for $133,240 (includes accrued interest).

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 the date indicated. Give entries through December 1, 2016. (Assume that no reversing entries were made.)

Reference no: EM132000285

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