Wilbury Corporation issued $1 million of 13.5% bonds for $985,071.68. The bonds are dated and issued October 1, 2019, are due September 30, 2020, and pay interest semiannually March 31 and September 30. Assume an effective yield rate of 14% Required: 1. Prepare a bond interest expense and discount amortization schedule using the stra n e method 2. Prepare a bond interest expense and discount amortization schedule using the effective interest method. 3. Prepare adjusting entries for the end of the fiscal year December 31, 2018, using the a straight-line method of amortization b. effective interest method of amortization 4. income before interest and income taxes of 30% in 2020 is $500,000, compute net income under och storative 6. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the band retirement using the a straight-line method of amortization b. effective interest method of amortization 6. Compute the company times interest eamed (pretax operating income divided by interest expense) for 2020 underach w ave WILBURY CORPORATION Bond Interest Expense and Discount Amortization Schedule Straight-Line Method Date Cash Credit Unamortized Discount Credit Interest Expense Debit Book Value of Bonds 10/01/19 03/31/20 09/30/20 03/31/21 09/30/21 03/31/22 09/30/22 03/31/23 09/30/23 WILBURY INCORPORATED Bond Interest Expense and Discount Amortization Schedule Effective Interest Method 13.5% Bonds Sold to Yield 14% Interest Expense Unamortized Cash Credit Debit Discount Credit Date Book Value of Bonds 10/01/19 LLLLLL SAFE 03/31/20 09/30/20 03/31/21 09/30/21 03/31/22 09/30/22 03/31/23 09/30/23 3a. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the straight-line method of amortization General Journal Instructions PAGE 1 GENERAL JOURNAL POST. REF. DEBIT CREDIT ACCOUNT TITLE Adjusting Entries 30. Prepare adjusting entries for the end of the fiscal year December 31, 2019, using the effective interest method of amortization General Journal Instructions GENERAL JOURNAL CAT DATE POST REK ACCOUNT TITLE Adjusting Entries 5a. Assume the company retired the bonds on June 30, 2020, af 98 plus accrued interest. Prepare the journal entries to record the band retirement using the straighting method of amortization General Journal Instructions GENERAL JOURNAL ACCOUNT TITLE 50. Assume the company retired the bonds on June 30, 2020, at 98 plus accrued interest. Prepare the journal entries to record the band retirement using the afective interest method of amortization General Joumal Instructions GENERAL JOURNAL DATE ACCOUNT TITLE 4. If income before interest and income taxes of 30% in 2020 is $500,000, compute net income under each alternative. Net Income Straight-Line Method Effective Interest Method 6. Compute the company's times interest earned (pretax operating income divided by interest expense) for 2020 under each alternative. Additional Instruction Times Interest Earned Straight-Line Method Effective Interest Method
