Problem 14-01 The following amortization and interest schedule reflects the issuance of 10-year bonds by Riverbed Corporation on January 1, 2014, and the subsequent interest payments and charges. The companys year-end is December 31, and financial statements are prepared once yearly.

Amortization Schedule

Year Cash Interest Amount Unamortized Carrying Value

1/1/2014 no cash amount no interest amount $55,433 $ 165,467

2014 $22,090 $24,820 52,703 168,197

2015 22,090 25,230 49,563 171,337

2016 22,090 25,701 45,952 174,948

2017 22,090 26,242 41,800 179,100

2018 22,090 26,865 37,025 183,875

2019 22,090 27,581 31,534 189,366

2020 22,090 28,405 25,219 195,681

2021 22,090 29,352 17,957 202,943

2022 22,090 30,441 9,606 211,294

2023 22,090 31,696 no amortized amount inputed 220,900

(a) Indicate whether the bonds were issued at a premium or a discount.

select an option Discount / Premium

(b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method. select a method Effective interest methodStraight-line method

(c) Determine the stated interest rate and the effective-interest rate. (Round answers to 0 decimal places, e.g. 18%.) The Stated rate % The effective rate %

(d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2014. (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 journal entry 3 affected accounts

(e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2014. (Interest is paid January 1.) (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 journal entry 3 affected accounts

(f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2021. Riverbed Corporation does not use reversing entries. (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 journal entry 2 affected accounts for either jan 1 or dec 31

1 journal entry 3 affected accounts for either jan 1 or dec 31