Question

Kleso, Intermediate Accounting, 17e Help System Announcements CALCULATOR PRINTER VERSION BACK Problem 14-02 (Part Level Submission) Sarasota Co is bullding a new hockey arena at a cost of $2,550,000. It received a downpayment of $450,000 from local businesses to support the project, and now needs to borrow $2,100,000 complete the project. It therefore decides to issue $2,100,000 of 11%, 10-year bonds. These bonds were issued on January 1, 2019, and pay interest annually on each January 1. The bonds yield 10%. (a) Your answer is correct. Prepare the joumal entry to record the issuance of the bonds on January 1, 2019. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answer too decimal places e-9.58,971. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Credit Date Debit Account Titles and Explanation January 1, 2019 Cash 2,229,030 Bonds Payable 2.100.000 129,030 Premium on Bonds Pay 129,00 SHOW LIST OR ACCOUNTS SHOW SOLUTION UN TO TEXT LINK TO TEXT Attempt 2 of sused (6) Prepare a bond amortization schedule up to and including January 1, 2023, using the effective interest method. (Hound answers to decimal places a 38.548) Carrying Interest Premium Amount of Date Pald Expense Amortization Bonds 1119 Cash 1/1/20 1/21 MacBook Air

Answer 1

Worknig Notes:
		Par Value of the Bonds (A) =	$                     21,00,000
		Issued price	$                     22,29,030
		Premium issued	$                       1,29,030
		Coupon Rate (B) =	11%
		Coupon amount (AXB)	$                       2,31,000
SOLUTION :
	Schedule of Interest revenue and bond premium Amortization
	Effective interest Method
	Date	Cash Paid	Interest @ 10 % on Carrying amount	Premium Amortized	Caryying Amount
	01/01/2019				$       22,29,030
	01/01/2020	$                                                                2,31,000	$                       2,22,903	$                   8,097	$       22,20,933
	01/01/2021	$                                                                2,31,000	$                       2,22,093	$                   8,907	$       22,12,026
	01/01/2022	$                                                                2,31,000	$                       2,21,203	$                   9,797	$       22,02,229
	01/01/2023	$                                                                2,31,000	$                       2,20,223	$                10,777	$       21,91,452