BOND SINKING FUNDS M. J. Adams Corporation pays $40,000 into a bond sinking fund each year for

Question:

BOND SINKING FUNDS M. J. Adams Corporation pays $40,000 into a bond sinking fund each year for the future redemption of bonds. At the end of the first year, earnings on the sinking fund are $3,200. When the bonds mature, there is a balance in the sinking fund of $301,800, of which $300,000 is used to redeem the bonds.

Prepare journal entries to record:

(a) The initial sinking fund deposit.

(b) The first year’s earnings.

(d) The return of excess cash to the corporation.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...