14-9

On June 30, 2017, Coronado Company issued $4,100,000face value of13%,20-year bonds at $4,408,441, a yield of12%. Coronado uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31.

Prepare the journal entries to record the following transactions.(Round answer to 0 decimal places, e.g. 38,548. 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.)

(1)The issuance of the bonds on June 30, 2017.(2)The payment of interest and the amortization of the premium on December 31, 2017.(3)The payment of interest and the amortization of the premium on June 30, 2018.(4)The payment of interest and the amortization of the premium on December 31, 2018.

No.

Date

Account Titles and Explanation

Debit

Credit

(1)June 30, 2017

(2)December 31, 2017

(3)June 30, 2018

(4)December 31, 2018

Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet.(Round answers to 0 decimal places, e.g. 38,548.)

CoronadoCompany

Balance Sheet

December 31, 2018

For the Year Ended December 31, 2018

For the Quarter Ended December 31, 2018

Current Assets

Current Liabilities

Intangible Assets

Long-term Investments

Long-term Liabilities

Property, Plant and Equipment

Stockholders' Equity

Total Assets

Total Current Assets

Total Current Liabilities

Total Intangible Assets

Total Liabilities

Total Liabilities and Stockholders' Equity

Total Long-term Investments

Total Long-term Liabilities

Total Property, Plant and Equipment

Total Stockholders' Equity

$

Premium on Bonds Payable

Loss on Redemption of Bonds

Interest Expense

Bad Debt Expense

Discount on Notes Payable

Notes Payable

Interest Payable

Notes Receivable

Book Value of Bonds Payable

Cash

$

Provide the answers to the following questions.

(1)What amount of interest expense is reported for 2018?(Round answer to 0 decimal places, e.g. 38,548.)

Interest expense reported for 2018$

(2)Will the bond interest expense reported in 2018 be the same as, greater than, or less than the amount that would be reported if the straight-line method of amortization were used?

The bond interest expense reported in 2018 will be

greater than

less than

same as

the amount that would be reported if the straight-line method of amortization were used.

(3)Determine the total cost of borrowing over the life of the bond.(Round answer to 0 decimal places, e.g. 38,548.)

Total cost of borrowing over the life of the bond$

(4)Will the total bond interest expense for the life of the bond be greater than, the same as, or less than the total interest expense if the straight-line method of amortization were used?

The total bond interest expense for the life of the bond will be

greater than

less than

the same as

the total interest expense if the straight-line method of amortization were used.