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The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2014, and the subsequent interest payments and

The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2014, and the subsequent interest payments and charges. The companys year-end is December 31, and financial statements are prepared once yearly.

Amortization Schedule

Year

Cash

Interest

Amount Unamortized

Carrying Value

1/1/2014

$5,651 $ 94,349

2014

$11,000 $11,322 5,329 94,671

2015

11,000 11,361 4,968 95,032

2016

11,000 11,404 4,564 95,436

2017

11,000 11,452 4,112 95,888

2018

11,000 11,507 3,605 96,395

2019

11,000 11,567 3,038 96,962

2020

11,000 11,635 2,403 97,597

2021

11,000 11,712 1,691 98,309

2022

11,000 11,797 894 99,106

2023

11,000 11,894 100,000

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

enter percentages rounded to 0 decimal places

%

The effective rate

enter percentages rounded to 0 decimal places

%

d.On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2014.

Date

Account Titles and Explanation

Debit

Credit

January 1, 2014

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

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.)

Date

Account Titles and Explanation

Debit

Credit

December 31, 2014

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

f.On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2021. Capulet Corporation does not use reversing entries.

Date

Account Titles and Explanation

Debit

Credit

choose a transaction date

January 1, 2021December 31, 2021

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

choose a transaction date

January 1, 2021December 31, 2021

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

enter an account title

enter a debit amount

enter a credit amount

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