Sheridan Co. sells $409,000 of 12% bonds on June 1, 2020. The bonds pay interest on December
Question:
Sheridan Co. sells $409,000 of 12% bonds on June 1, 2020. The bonds pay interest on December 1 and June 1. The due date of the bonds is June 1, 2024. The bonds yield 10%. On October 1, 2021, Sheridan buys back $126,790 worth of bonds for $131,790 (includes accrued interest). Give entries through December 1, 2022.
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 | ||||||||
|
|
|
| Carrying | ||||
6/1/20 | $ | $ | $ | $ | ||||
12/1/20 | ||||||||
6/1/21 | ||||||||
12/1/21 | ||||||||
6/1/22 | ||||||||
12/1/22 | ||||||||
6/1/23 | ||||||||
12/1/23 | ||||||||
6/1/24 |
* Difference due to rounding
Prepare all of the relevant journal entries from the time of sale until December 31, 2022. (Assume that no reversing entries were made.) (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers 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 |
6/1/20 | |||
12/1/20 | |||
12/31/20 | |||
6/1/21 | |||
10/1/21 | |||
(To record interest expense and premium amortization) | |||
10/1/21 | |||
(To record buy back of bonds) | |||
12/1/21 | |||
12/31/21 | |||
6/1/22 | |||
12/1/22 | |||
Intermediate Accounting Volume 2
ISBN: 9781119497042
12th Canadian Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy