The following amortization and interest schedule reflects the issuance of 10-year bonds by Novak Corporation on January 1, 2011, 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
1/1/2011						$13,494		$ 225,306
2011		$26,268		$27,037		12,725		226,075
2012		26,268		27,129		11,864		226,936
2013		26,268		27,232		10,900		227,900
2014		26,268		27,348		9,820		228,980
2015		26,268		27,478		8,610		230,190
2016		26,268		27,623		7,255		231,545
2017		26,268		27,785		5,738		233,062
2018		26,268		27,967		4,039		234,761
2019		26,268		28,171		2,136		236,664
2020		26,268		28,404				238,800

(a) Indicate whether the bonds were issued at a premium or a discount.

DiscountPremium

(b) Indicate whether the amortization schedule is based on the straight-line method or the effective-interest 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			%
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, 2011. (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, 2011

(e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2011. (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, 2011

(f) On the basis of the schedule above, prepare the journal entries to reflect the bond transactions and accruals for 2018. Novak 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
January 1, 2018December 31, 2018
January 1, 2018December 31, 2018