Question

Sandhill Corporation issued $680,000, 7%, 20-year bonds on January 1, 2020, for $613,236. This price resulted in an effective-interest rate of 8% on the bonds. Interest is payable annually on January 1. Sandhill uses the effective-interest method to amortize bond premium or discount.

Prepare the journal entry to record the issuance of the bonds. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1

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List of Accounts

  

  

Prepare the journal entry to record the accrual of interest and the discount amortization on December 31, 2020. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Dec. 31

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List of Accounts

  

  

Prepare the journal entry to record the payment of interest on January 1, 2021. (Round answers to 0 decimal places, e.g. 15,250. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date	Account Titles and Explanation	Debit	Credit
Jan. 1

Please attach an amoritization table to this too, and show how you did it

Answer 1

Journal Credit ($) Account Titles and Explanation 1-Jan Cash Discount on Bonds Payable Bonds Payable (To record the issuance of bond) Debit ($) 613,236 66,764 680,000 49,059 31-Dec Interest Expense Discount on Bonds Payable Interest payable (To record the interest accrued and discount amortization on bonds payable) 1,459 47,600 47,600 1-Jan Interest payable Cash (To record the payment of interest) 47,600 Please give as many likes for the hard work.

Amortization Schedule (Discount) Interest Expense Increase in Carrying Carrying value = Previous Previous Carrying Value = Interest carrying value + Increase Market rate value X Market rate expense - Coupon lin Carrying Value 613,236 8% 49,059 1,459 614,695 Date Coupon 1/1/2020 12/31/2020 47,600 FV Coupon rate 7% Coupon = FV X Coupon rate $ 47,600 680,000