The following amortization and interest schedule reflects

The following amortization and interest schedule reflects

14-1 The following amortization and interest schedule reflects the issuance of 11-year bonds byCapulet Corporation on January 1, 2008, and the subsequent interest payments and charges. Thecompany’s year-end is December 31, and financial statements are prepared once yearly.Year1/1/20082008200920102011201220132014201520162017Amortization ScheduleAmountCashInterestUnamortized$41,640$21,879$23,58939,93021,87923,84637,96321,87924,14135,70121,87924,48033,10021,87924,87030,10921,87925,31926,66921,87925,83522,71321,87926,42818,16421,87921,87927,11034,81212,933CarryingValue$ 157,260158,970160,937163,199165,800168,791172,231176,187180,736185,967198,900Instructions(a) Indicate whether the bonds were issued at a premium or a discount.(b) Indicate whether the amortization schedule is based on the straight-line method or the effectiveinterest method.(c) Determine the stated interest rate and the effective-interest rate. (Round answers to 0 decimalplaces, e.g. 38,548.)(d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds onJanuary 1, 2008. (Round answers to 0 decimal places, e.g. 38,548.)(e) On the basis of the schedule above, prepare the journal entry or entries to reflect the bondtransactions and accruals for 2008. (Interest is paid January 1.) (Round answers to 0 decimal places,e.g. 38,548.)(f) On the basis of the schedule above, prepare the journal entry or entries to reflect the bondtransactions and accruals for 2015. Capulet Corporation does not use reversing entries. (Roundanswers to 0 decimal places, e.g. 38,548.)14-5In each of the following independent cases the company closes its books on December 31.Sanford Co. sells $510,200 of 8% bonds on March 1, 2014. The bonds pay interest on September 1 andMarch 1. The due date of the bonds is September 1, 2017. The bonds yield 12%.Prepare a bond amortization schedule using the effective-interest method for discount and premiumamortization. Amortize premium or discount on interest dates and at year-end.(Round answers to 0decimal places, e.g. 38,548.)Schedule of Bond Discount AmortizationEffective-Interest MethodBonds Sold to YieldDate3/1/14CashPaidInterestExpense$CarryingAmount ofBondsDiscountAmortized$$$9/1/143/1/159/1/153/1/169/1/163/1/179/1/17** Difference due to roundingPrepare all of the relevant journal entries from the time of sale until the date indicated. (Assume thatno reversing entries were made.) (Round answers to 0 decimal places, e.g. 38,548. If no entryis required, select "No Entry" for the account titles and enter 0 for the amounts. Creditaccount titles are automatically indented when amount is entered. Do not indentmanually.)Date3/1/149/1/1412/31/14Account Titles andExplanationDebitCredit3/1/159/1/1512/31/152. Titania Co. sells $400,000 of 12% bonds on June 1, 2014. The bonds pay interest on December 1 andJune 1. The due date of the bonds is June 1, 2018. The bonds yield 10%. On October 1, 2015, Titaniabuys back $120,000 worth of bonds for $126,000 (includes accrued interest). Give entries throughDecember 1, 2016.InstructionsPrepare all of the relevant journal entries from the time of sale until the date indicated. Use theeffective-interest method for discount and premium amortization (construct amortization tables whereapplicable). Amortize premium or discount on interest dates and at year-end. (Assume that no reversingentries were made.)


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