Question
On January 1, 2020, Sunland Company acquires $230,000of Spiderman Products, Inc.,8% bonds at a price of $202,847. Interest is received on January 1 of each
On January 1, 2020, Sunland Company acquires $230,000of Spiderman Products, Inc.,8% bonds at a price of $202,847. Interest is received on January 1 of each year, and the bonds mature on January 1, 2023. The investment will provide Sunland Company a13% yield. The bonds are classified as held-to-maturity.
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Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the straight-line method.(Round answers to 0 decimal places, e.g. 2,500.)
Schedule of Interest Revenue and Bond Discount Amortization
Straight-line Method
Bond Purchased to Yield
Date
Cash
Received
Interest
Revenue
Bond Discount
Amortization
Carrying Amount
of Bonds
1/1/20
$enter a dollar amount
$enter a dollar amount
$enter a dollar amount
$enter a dollar amount
1/1/21
enter a dollar amount
enter a dollar amount
enter a dollar amount
enter a dollar amount
1/1/22
enter a dollar amount
enter a dollar amount
enter a dollar amount
enter a dollar amount
1/1/23
enter a dollar amount
enter a dollar amount
enter a dollar amount
enter a dollar amount
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Prepare a 3-year schedule of interest revenue and bond discount amortization, applying the effective-interest method.(Round answers to 0 decimal places, e.g. 2,500.)
Schedule of Interest Revenue and Bond Discount Amortization
Effective-Interest Method
Bond Purchased to Yield
Date
Cash
Received
Interest
Revenue
Bond Discount
Amortization
Carrying Amount
of Bonds
1/1/20
$enter a dollar amount
$enter a dollar amount
$enter a dollar amount
$enter a dollar amount
enter a dollar amount
enter a dollar amount
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(c)Prepare the journal entry for the interest revenue and discount amortization under the straight-line method at December 31, 2021.(d)Prepare the journal entry for the interest revenue and discount amortization under the effective-interest method at December 31, 2021.
(Round answers to 0 decimal places, e.g. 2,500. Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)
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