Problem 14-01 The following amortization and interest schedule reflects the issuance of 10-year bonds by Crane Corporation on January 1, 2014, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly. Year 1/1/2014 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Amortization Schedule Amount Cash Interest Unamortized $24,907 $22,040 $23,459 23,488 22,040 23,629 21,899 22,040 23,820 20,119 22,040 24,034 18,125 22,040 24,273 15,892 22,040 24,541 13,391 22,040 24,841 10,590 22,040 25,177 7,453 22,040 25,554 3,939 22,040 25,979 Carrying Value $ 195,493 196,912 198,501 200,281 202,275 204,508 207,009 209,810 212,947 216,461 220,400 (a) Indicate whether the bonds were issued at a premium or a discount. (b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method. (c) Determine the stated interest rate and the effective interest rate. (Round answers to 0 decimal places, e.g. 18%.) (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 o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation January 1, 2014 (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 O for the amounts, Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit December 31, 2014 (f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2021. Crane Corporation does not use reversing entries. (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.) (f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2021. Crane Corporation does not use reversing entries. (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.) Date Account Titles and Explanation Debit Credit Click if you would like to Show Work for this question: Open Show Work
