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Problem 14-5 In each of the following independent cases, the company closes its books on December 31.

Problem 14-5 In each of the following independent cases, the company closes its books on December 31.

Problem 14-5
In each of the following independent cases, the company closes its books on December 31.



Sarasota Co. sells $532,000 of 8% bonds on March 1, 2017. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2020. 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. (Round answers to 0 decimal places, e.g. 38,548.)

Schedule of Bond Discount Amortization
Effective-Interest Method
Bonds Sold to Yield


Date

Cash
Paid

Interest
Expense

Discount
Amortized
Carrying
Amount of
Bonds
3/1/17 $
$
$
$
9/1/17

 

3/1/18

 

9/1/18

 

3/1/19

 

9/1/19

 

3/1/20

 

9/1/20

 


Prepare all of the relevant journal entries from the time of sale until the date indicated. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer to 0 decimal places e.g. 58,971. 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.)

Date
Account Titles and Explanation
Debit
Credit
3/1/17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/1/18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
manish jayant 10-Sep-2020

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