Exercise 14-10 On January 1, 2017, Sheffield Company sold 11% bonds having a mat

Question

Exercise 14-10 On January 1, 2017, Sheffield Company sold 11% bonds having a maturity value of $610,000 for $683,065, 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. Sheffield 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 Prepare a schedule of interest expense and bond amortization for 2017-2019. (Round answer to o decimal places, e.g. 38,548.) Schedule of Interest Expense and Bond Premium Amortization Effective-Interest Method Cash Paid Interest Expense Premium Amortized Carrying Amount of Bonds Date 12/31/17 12/31/18 12/31/19 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 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 Question Attempts: 0 of 2 used

Explanation / Answer

Date Account titles & Explanations Debit Credit 1/1/2017 Cash 683,065 premium on bonds payable 610,000 Bonds payable 73,065 Schedule of Interest expense and Bond premium Amortization Date Cash interest premium Carrying paid expense amortized amount of bonds 1/1/2017 683,065 12/31/2017 67,100 54645 12455 670610 12/31/2018 67,100 53649 13451 657159 12/31/2019 67,100 52573 14527 642632 interest paid 610,000*11%= 67100 interest expense = CV *8% 12/31/2017 interest expense 54,645 premium on bonds payable 12,455 cash 67,100 12/31/2018 interest expense 56,649 premium on bonds payable 13,451 cash 67,100

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