Reference no: EM132496361
The following amortization and interest schedule reflects the issuance of 10-year bonds by Sweet Corporation on January 1, 2011, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly.
Amortization Schedule Year Cash Interest Amount Unamortized Carrying Value
1/1/2011 $10,402 $ 173,698
2011 $20,251 $20,844 9,809 174,291
2012 20,251 20,915 9,145 174,955
2013 20,251 20,995 8,401 175,699
2014 20,251 21,084 7,568 176,532
2015 20,251 21,184 6,635 177,465
2016 20,251 21,296 5,590 178,510
2017 20,251 21,421 4,420 179,680
2018 20,251 21,562 3,109 180,991
2019 20,251 21,719 1,641 182,459
2020 20,251 21,892 184,100
Question (a) Indicate whether the bonds were issued at a premium or a discount.
Question (b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method.
Question (c) Determine the stated interest rate and the effective-interest rate. (Round answers to 0 decimal places, e.g. 18%.)
Question (d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2011. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Question (e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2011. (Interest is paid January 1.) (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Question (f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2018. Sweet Corporation does not use reversing entries. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)