Exercise 14-9 (Part Level Submission) On June 30, 2017, Sarasota Company issued $5,000,000 face value of 13%, 20-year bonds at $5,376,148, a yield of 12%. Sarasota uses the effective-interest method to amortize bond premium or discount. The bonds pay semiannual interest on June 30 and December 31. (a) Your answer is correct. 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 o 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 Aerunt Tities and Explanation Credit (1) June 30, 2017 cash 5376148 Premium on Bonds Payable 376148 Bonds Payable 5000000 (2) December 31, 2017 interest Expense 322500 2431 Premium on Bonds Payable Payable Cash 325000 (3) June 30, 2018 Interest Expense 1 322423 Premium on Bonds Payable um an Bonds Payable C 325000 U 322268 (4) December 31, 2018 interest Expense Premium on Bonds Payable T Cash 325000 Click if you would like to Show Work for this question: Open Show Work Your answer is correct. Show the proper balance sheet presentation for the liability for bonds payable on the December 31, 2018, balance sheet. (Round answers to o decimal places, e.g. 38,548.) Sarasota Company Balance Sheet December 31, 2018 Long-term Liabilities Bonds Payable Premium on Bonds Payable Book Value of Bands Payable Click if you would like to Show Work for this questions Open Show Work SHOW LIST OF ACCOUNTS OW SOLUTION SHOW ANSWER Attempts: 2 of 3 used (c) 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 amount that would be reported if the straight- The bond interest expense reported in 2018 will be 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 interest expense if the straight- The total bond interest expense for the life of the bond will be line method of amortization were used. Click if you would like to show Work for this question. Deen Show Work
