Problem 14-1 The following amortization and interest schedule reflects the issuance of 10-year bonds by Metlock Corporation on January 1, 2011, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly Amortization Schedule Amount Unamortized Carrying Value Year Cash Interest 1/1/2011 $25,359 $199,041 2011 $22,440 $23,885 23,914 200,486 24,058 2012 22,440 22,296 202,104 22,440 24,252 2013 20,484 203,916 2014 22,440 24,470 18,454 205,946 22,440 2015 24,714 16,180 208,220 24,986 2016 22,440 13,634 210,766 2017 22,440 25,292 10,782 213,618 2018 22,440 25,634 7,588 216,812 22,440 26,017 220,389 2019 4,011 224,400 2020 22,440 26,451 (a) Indicate whether the bonds were issued at a premium or 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, 2011. (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.) Date Account Titles and Explanation Debit Credit January 1, 2011 (e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2011. (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.) Debit Credit Date Account Titles and Explanation December 31, 2011 (f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2018. Metlock 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 in dent manually.) Credit Date Account Titles and Explanation Debit