The following amortization and interest schedule reflects the issuance of 10-yea

Question

The following amortization and interest schedule reflects the issuance of 10-year bonds by Sage Corporation on January 1, 2011, and the subsequent interest payments and charges. The company’s year-end is December 31, and financial statements are prepared once yearly.

Amortization Schedule

Year

Cash

Interest

Amount
Unamortized

Carrying
Value

Amortization Schedule

Year

Cash

Interest

Amount
Unamortized

Carrying
Value

1/1/2011 $24,116 $ 189,284 2011 $21,340 $22,714 22,742 190,658 2012 21,340 22,879 21,203 192,197 2013 21,340 23,064 19,479 193,921 2014 21,340 23,271 17,548 195,852 2015 21,340 23,502 15,386 198,014 2016 21,340 23,762 12,964 200,436 2017 21,340 24,052 10,252 203,148 2018 21,340 24,378 7,214 206,186 2019 21,340 24,742 3,812 209,588 2020 21,340 25,152 213,400 (d) On the basis of the schedule above, prepare the journal entry to record the issuance of the bonds on January 1, 2011. (If no entry is req 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, 2011 Cash 189284 Discount on Bonds Payable 24116 Bonds Payable 213400 (e) On the basis of the schedule above, prepare the journal entry to reflect the bond transactions and accruals for 2011. (Interest is paid Janua for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do n Date Account Titles and Explanation Debit Credit December 31, 2011 Interest Expense 22714 Discount on Bonds Payable 1374 Cash 21340

Explanation / Answer

Sage Corporation

Journal Entries –

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

1-Jan-11

Cash

$189,284

Discount on Bonds Payable

$24,116

Bonds Payable

$213,400

(To record the issuance of bond)

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

31-Dec-11

Interest Expense

$22,714

Discount on Bonds Payable

$1,374

Interest Payable

$21,340

(To record accrued interest and interest expense)

1-Jan-18

Interest Payable

$21,340

Cash

$21,340

(To record payment of interest)

31-Dec-18

Interest Expense

$24,378

Discount on Bonds Payable

$3,038

Interest Payable

$21,340

(To record accrued interest expense and interest payable)

Date

Account Titles and Explanation

Ref. No.

Debit

Credit

1-Jan-11

Cash

$189,284

Discount on Bonds Payable

$24,116

Bonds Payable

$213,400

(To record the issuance of bond)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.