Question
The following amortization and interest schedule reflects the issuance of 10-year bonds by Sheffield 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 Sheffield 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 | $11,386 | $ 190,114 | ||||||
2014 | $22,165 | $22,814 | 10,737 | 190,763 | ||||
2015 | 22,165 | 22,892 | 10,010 | 191,490 | ||||
2016 | 22,165 | 22,979 | 9,196 | 192,304 | ||||
2017 | 22,165 | 23,076 | 8,285 | 193,215 | ||||
2018 | 22,165 | 23,186 | 7,264 | 194,236 | ||||
2019 | 22,165 | 23,308 | 6,121 | 195,379 | ||||
2020 | 22,165 | 23,445 | 4,841 | 196,659 | ||||
2021 | 22,165 | 23,599 | 3,407 | 198,093 | ||||
2022 | 22,165 | 23,771 | 1,801 | 199,699 | ||||
2023 | 22,165 | 23,966 | 201,500 |
(a) Indicate whether the bonds were issued at a premium or a discount. select an option DiscountPremium (b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest method. select a method Effective interest methodStraight-line method (c) Determine the stated interest rate and the effective-interest rate. (Round answers to 0 decimal places, e.g. 18%.)
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. (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, 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.) (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 |
---|---|---|---|
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. Sheffield 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 indent manually.)
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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