14-1 The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2006, and the subsequent interest payments and charges. The companys year-end is December 31, and financial statements are prepared once yearly. Amortization Schedule Year Cash Interest Amount Unamortized Carrying Value 1/1/2006 $14,578 $ 114,422 2006 $12,900 $13,731 13,747 115,253 2007 12,900 13,830 12,817 116,183 2008 12,900 13,942 11,775 117,225 2009 12,900 14,067 10,608 118,392 2010 12,900 14,207 9,301 119,699 2011 12,900 14,364 7,837 121,163 2012 12,900 14,540 6,197 122,803 2013 12,900 14,736 4,361 124,639 2014 12,900 14,957 2,304 126,696 2015 12,900 15,204 129,000 (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 effective-interest method. (c) Determine the stated interest rate and the effective-interest rate. (Round answers to 0 decimal places, e.g. $38,548.) The stated rate % The effective rate % (d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2006. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2006. (Interest is paid January 1.) (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit (f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2013. Capulet Corporation does not use reversing entries. (Round answers to 0 decimal places, e.g. $38,548. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit Jan. 1, 2013 Dec. 31, 2013 Click if you would like to Show Work for this question: Open Show Work