Problem 14-5

(Comprehensive Bonds Problem) In each of the following independent cases, the company closes its books on December 31, 2021.

1. Sanford company sells $500,000 of 10% bonds on March 1. 2020. The bonds pay interest on September 1 and March 1. The due date of the bonds is September 1, 2023. The bonds yield 12%. Give entries through December 31, 2021.

Instructions: for the above case, prepare all the relevant journal entries from the time of the sale until the date indicated. Use the effective interest method for discount amortization (construct amortization table) where applicable. Amortize discount on interest date and year-end (assume that no reversing entries are made).