Sheng Corporation pays $50,000 into a bond sinking fund each year for the future redemption of bonds. At the end of the first year, earnings on the sinking fund are $4,750. When the bonds mature, there is a balance in the sinking fund of $502,125, of which $500,000 is used to redeem the bonds.

Required:

	Prepare journal entries to record:
	(a) The initial sinking fund deposit.
	(b) The first years earnings.
	(c) The redemption of the bonds.
	(d) The return of excess cash to the corporation.

CHART OF ACCOUNTSSheng CorporationGeneral Ledger

	ASSETS
101	Cash
122	Accounts Receivable
141	Supplies
153	Bond Sinking Fund
181	Office Equipment

	LIABILITIES
202	Accounts Payable
219	Wages Payable
252	Bonds Payable

	EQUITY
321	Common Stock
322	Paid-In Capital in Excess of Par-Common Stock
329	Paid-In Capital from Sale of Treasury Stock
331	Retained Earnings
333	Cash Dividends

	REVENUE
401	Sales
414	Sinking Fund Earnings

	EXPENSES
511	Wages Expense
512	Advertising Expense
513	Bank Credit Card Expense
514	Store Supplies Expense
515	Travel and Entertainment Expense
549	Miscellaneous Expense

	On December 31, prepare journal entries to record:
	(a) The initial sinking fund deposit.
	(b) The first years earnings.

General Journal Instructions

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GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
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2
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	On December 31, prepare journal entries to record:
	(c) The redemption of the bonds.
	(d) The return of excess cash to the corporation.

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GENERAL JOURNAL

	DATE	ACCOUNT TITLE	POST. REF.	DEBIT	CREDIT
1
2
3
4