(Comprehensive Bond Problem)

Prepare the journal entries related to the sale of bonds and subsequent payments on those bonds. Also prepare the year-end accrual of interest expense. 1. Sanford Co. sells$500,000of10%bonds on March 1, 2014. Thebonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2017.The bonds yield12%Give the entries through December 31, 2015.A) Prepare the Bond Discount Amortization TableSchedule of Bond Discount AmortizationEffective Interest Method10% Bonds Sold to Yield 12%Amortization CarryingCashInterest of BondValueDatePaidInterest ExpenseDiscountof BondsMar 1, 14AmountSep 1, 14FormulaFormulaFormulaFormulaMar 1, 15FormulaFormulaFormulaFormulaSep 1, 15FormulaFormulaFormulaFormulaMar 1, 16FormulaFormulaFormulaFormulaSep 1, 16FormulaFormulaFormulaFormulaMar 1, 17FormulaFormulaFormulaFormulaSep 1, 17FormulaFormulaFormulaFormulaB) Prepare journal entry to record issuance of the bond on March 1, 2014Mar 1, 14Account TitleAmountAccount TitleAmountAccount TitleAmountC) Prepare the journal entry to record the first payment of bond interest on September 1.Sep 1, 14Account TitleAmountAccount TitleAmountAccount TitleAmountD) Prepare the journal entry to reord the accrual of interest at December 31. Assume that no prior accruals have been made.Dec 31, 14Account TitleAmountAccount TitleAmountAccount TitleAmountNote: Amortization table is semi-annual, interest rate is stated as annual value.E) Prepare the journal entry for the March 1, payment of interest. Assume that no additional accrualshave been made since December and no reversing entry was made at December.Mar 1, 15Account TitleAmountAccount TitleAmountAccount TitleAmountAccount TitleAmountF) Prepare the journal entry to record the payment of bond interest on September 1.Sep 1, 15Account TitleAmountAccount TitleAmountAccount TitleAmountG) Prepare the journal entry to record the accrual of interest at December 31.Dec 31, 15Account TitleAmountAccount TitleAmountAccount TitleAmountSee also tabs on payroll and goodwill