Reference no: EM133127613
Question - Sunland Corporation issued $320,000 of 5-year bonds on April 1, 2020. Interest is paid semi-annually on April 1 and October 1. Below is a partial amortization schedule for the first few years of the bond issue.
|
Semi-Annual
Interest Period
|
Interest
Payment
|
Interest
Expense
|
Amortization
|
Bond
Amortized Cost
|
|
Apr.1, 2020
|
|
|
|
$334,755
|
|
Oct. 1, 2020
|
$6,400
|
$5,021
|
$1,379
|
333,376
|
|
Apr. 1, 2021
|
6,400
|
5,001
|
1,399
|
331,977
|
|
Oct. 1, 2021
|
6,400
|
4,980
|
1,420
|
330,557
|
|
Apr. 1, 2022
|
6,400
|
4,958
|
1,442
|
329,115
|
|
Oct. 1, 2022
|
6,400
|
4,937
|
1,463
|
327,652
|
|
Apr. 1, 2023
|
6,400
|
4,915
|
1,485
|
326,167
|
Required -
Were the bonds issued at a discount or at a premium?
What is the bonds' face value?
What will the bonds' amortized cost be at the maturity date?
What will be the total interest payment over the five-year life of the bonds? Total interest expense?
Prepare the journal entry to record the issuance of the bond.
Prepare the journal entry for the first interest payment.
Prepare the adjusting journal entry on December 31, 2020, assuming this is Sunland's year end.
Prepare the journal entry for the payment of interest on April 1, 2021. Assume no reversing entries have been used.