The following amortization and interest schedule is for the issuance of 10-year bonds by Capulet Corporation on January 1, 2020, and the subsequent interest payments and charges. The company's year end is December 31 and it prepares its financial statements yearly. 

Instructions 

a. Indicate whether the bonds were issued at a premium or a discount and explain how you can determine this fact from the schedule. 

b. Indicate whether the amortization schedule is based on the straight-line method or the effective interest method and explain how you can determine which method is used. Are both amortization methods accepted for financial reporting purposes? 

c. Determine the stated interest rate and the effective interest rate. 

d. Based on the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2020. 

e. Based on the schedule above, prepare the journal entry(ies) to reflect the bond transactions and accruals for 2020. (Interest is paid January 1.) 

f. Based on the schedule above, prepare the journal entry(ies) to reflect the bond transactions and accruals for 2028. Capulet Corporation does not use reversing entries.

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Amortization Schedule Year Cash Interest Amount Carrying Amount Unamortized Jan. 1, 202o $5,651 $ 94,349 Dec. 31, 2020 $11,000 $11,322 5,329 94,671 2021 11,000 11,361 4,968 95,032 4,564 95,436 2022 11,000 11,404 2023 11,000 11,452 4,112 95,888 2024 11,000 11,507 3,605 96,395 2025 11,000 11,567 3,038 96,962 2026 11,000 11,635 2,403 97,597 2027 11,000 11,712 1,691 98,309 2028 11,000 11,797 894 99,106 2029 11,000 11,894 -0- $100,000