Question

On January 1, 2017, Sunland Company sold 12% bonds having a maturity value of $520,000 for $603,047, which provides the bondholders with a 8% yield. The bonds are dated January 1, 2017, and mature January 1, 2022, with interest payable December 31 of each year. Sunland Company allocates interest and unamortized discount or premium on the effective-interest basis.

Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places, e.g. 38,548. 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, 2017 SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare a schedule of interest expense and bond amortization for 2017–2019. (Round answer to 0 decimal places, e.g. 38,548.) Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method Date Cash Paid Interest Expense Premium Amortized Carrying Amount of Bonds 1/1/17 $ $ $ $ 12/31/17 12/31/18 12/31/19 SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare the journal entry to record the interest payment and the amortization for 2017. (Round answer to 0 decimal places, e.g. 38,548. 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, 2017 SHOW LIST OF ACCOUNTS LINK TO TEXT

Prepare the journal entry to record the interest payment and the amortization for 2019. (Round answer to 0 decimal places, e.g. 38,548. 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, 2019

Answer 1

Prepare the journal entry at the date of the bond issuance. (Round answer to 0 decimal places, e.g. 38,548. 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, 2017 Cash 603047 Bonds payable 520000 Premium on bonds payable 83047

Prepare a schedule of interest expense and bond amortization for 2017–2019. (Round answer to 0 decimal places, e.g. 38,548.) Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method Date Cash Paid Interest Expense Premium Amortized Carrying Amount of Bonds 1/1/17 $ $ $ $603047 12/31/17 62400 48244 14156 588891 12/31/18 62400 47111 15289 573602 12/31/19 62400 45888 16512 557090

Prepare the journal entry to record the interest payment and the amortization for 2017. (Round answer to 0 decimal places, e.g. 38,548. 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, 2017 Interest expense 48244 Premium on bonds payable 14156 Cash 62400

Prepare the journal entry to record the interest payment and the amortization for 2019. (Round answer to 0 decimal places, e.g. 38,548. 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, 2019 Interest expense 45888 Premium on bonds payable 16512 Cash 62400