Question
The following amortization and interest schedule reflects the issuance of 10-year bonds by Wildhorse Corporation on January 1, 2019, and the subsequent interest payments and
The following amortization and interest schedule reflects the issuance of 10-year bonds by Wildhorse Corporation on January 1, 2019, and the subsequent interest payments and charges. The company's year-end is December 31, and financial statements are prepared once yearly.
Amortization Schedule
Year. Cash. Interest. Amount Unamortized Carrying Value
1/1/19. --- ---- $14,126 $110,874
2019 $12,500 $13,305 13,321 111,679
2020. 12,500. 13,401 12,420 112,580
2021 12,500. 13,510 11,410 113,590
2022 12,500. 13,631. 10,279 114,721
2023. 12,500 13,767 9,012 115,988
2024 12,500. 13,919 7,593 117,407
2025. 12,500 14,089 6,004 118,996
2026 12,500. 14,280 4,224 120,776
2027. 12,500 14,493 2,231 122,769
2028. 12,500 14,731. ------ 125,000
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.
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, 2019.
e. On the basis of the schedule above, prepare the journal entry or entries to record the bond transactions and accruals for 2019. (Interest is paid January 1)
f. On the basis of the schedule above, prepare the journal entry or entries to record the bond transactions and accruals for 2026. Wildhorse Corporation does not use reversing entries
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