Bonds Issued at Face Value With Sinking Fund Martin Manufacturing issued the following bonds: 100 Date of issue and sale: April 1, 20-1 Principal amount: $500,000 Sale price of bonds: Denomination of bonds: $10,000 Life of bonds: 10 years Stated rate: 7%, payable semiannually on September 30 and March 31 Annual sinking fund requirement: $34,000, payable June 1 Required: Prepare journal entries for the activities listed below. If an amount box does not require an entry, leave it blank. a. Issuance of the bonds. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 1 1 20-1 Apr 1 Bond Interest Expense Cash 2 2 b. Deposit to sinking fund on June 1. Page: DOC. POST. DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT 1 20-1 June 1 1 2 2 c. Interest payment on the bonds on September 30, 20-1. Page: DOC. POST. DATE ACCOUNT TITLE NO. REF. 1 20-1 Sept. 30 Bond Interest Expense 2 Cash DEBIT CREDIT 17,500 1 17,500 2 d. Earnings of $2,400 on the sinking fund in 20-1. Page: DOC. POST. DATE ACCOUNT TITLE NO. REF. DEBIT CREDIT 1 20-1 Dec. 31 2,400 1 2 2,400 2 e. Year-end adjustment on the bonds for 20-1. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 8,750 1 1 20-1 Dec. 31 Bond Interest Expense Bond Interest Payable 2 8,750 2 f. Reversing entry for the beginning of 20-2. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. DEBIT CREDIT 1 20-2 Jan. 1 Bond Interest Payable 8,750 1 2 Bond Interest Expense 8,750 N g. Interest payment on the bonds on March 31, 20-2. Page: ACCOUNT TITLE DOC. POST. NO. REF. 1 20-2 Mar. 31 Bond Interest Expense Cash DATE DEBIT CREDIT 17,500 1 2 17,500 2 h. Deposit to sinking fund on June 1, 20-2. Page: DATE ACCOUNT TITLE DOC. POST. NO. REF. 1 20-2 June 1 Bond Sinking Fund Bond Sinking Fund DEBIT CREDIT 34,000 1 2 34,000 N i. Redemption at maturity from the sinking fund. j. Return of excess cash of $1,050 from the sinking fund to the corporation. Page: DATE ACCOUNT TITLE DOC. POST. DEBIT NO. REF. CREDIT Cash 1 i. 2011 Mar. 31 1,050 1 2 Bond Sinking Fund 1,050 2 NM 3 3 4 j. Mar. 31 4 5